The restaurant sector was among the many high performing sectors on Thursday after a robust report from Wingstop (NASDAQ:WING) provided indications that commodity costs could also be coming down.

Inflation has been a key concern within the house for a lot of 2022, as worth will increase have aroused suspicion about demand destruction and trade-down from sit-down eating places. Certainly, Chipotle Mexican Grill (CMG), McDonald’s (MCD), BJ’s Eating places (BJRI), and extra have all introduced worth will increase to proceed into the shut of 2022.

“Our fashions assume little reduction from meals prices on the horizon given contracting and nonetheless ongoing geopolitical considerations/commodity volatility,” RBC analyst Christopher Carril wrote in a latest notice. “On labor, latest firm commentary and BLS knowledge counsel that staffing ranges have lately improved, and whereas we expect this might probably end in easing Y/Y wage pressures within the 2H of the 12 months, we’re nonetheless listening to of pockets of labor pressures.”

Nonetheless, a report from Wingstop on Thursday morning that famous a stark 18.8% lower in the price of bone-in rooster wings served as a sign that commodity prices could also be coming down. CEO Michael Skipworth referred to as it a “significant deflation”, a stark distinction to latest commentary from its friends. Moreover, the corporate provided optimistic commentary on labor prices, a priority that will additionally ebb because the economic system grinds right into a recession and the labor market loosens.

Whereas Wingstop (WING) +21.06% led good points on the day as shopper discretionary shares surged typically, quite a few restaurant shares took off alongside it. Main gainers included Shake Shack (SHAK) +7.66%, Dutch Bros. (BROS) +9.29%, Portillos (PTLO) +7.54%, Darden Eating places (DRI) +3.98%, BJ’s Restaurant (BJRI), Sweetgreen (SG) +5.1%, Papa John’s (PZZA) +4.75%, Dine Manufacturers (DIN) +3.22%, Denny’s Company (DENN) +4.48%, Cracker Barrel (CBRL) +3.28%, Cheesecake Manufacturing unit (CAKE) +5.04%, Brinker Worldwide (EAT) +8.51%, Jack within the Field (JACK) +5.74%, and Bloomin’ Manufacturers (BLMN) +5.63%.

Learn extra on long term developments for restaurant shares.