6 Best Restaurant Stocks To Invest In
The outlook for restaurants looks great right now. The industry as a whole has held its own, despite challenges that come with rising inflation and interest rates. Consumers were definitely tightening their belts a bit, and being more cautious with their spending — except when it came to dining out, where they didn’t seem to hold back at all. Restaurant sales just kept on surging. If you’re an investor on the hunt for restaurant stocks, here are six that are particularly appetizing right now.
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1. Wingstop
Wingstop (WING) has found a smart way to deal with the volatility in chicken wing costs–by incorporating chicken thighs into their menu. This has helped the company maintain healthy profit margins even as poultry prices have fluctuated. And Wingstop’s business is really humming, with impressive unit growth of 13% and same-store sales up 18% last year–clear signs that their model is resonating with customers. It’s no wonder the stock has gained 380% over the past five years.
2. Ruth’s Hospitality Group
Ruth’s Hospitality Group, Inc. (RUTH), owner of Ruth’s Chris Steakhouse, has been able to pass along higher food and labor costs to their customers through strategic price increases. This has enabled the company to stay profitable in the face of inflation. Ruth’s Hospitality stock has jumped 26% in the last year and an impressive 156% over three years. At a Price-To-Earnings ratio below the industry average, the stock could be undervalued compared to its peers. Plus, it offers a dividend yield of 2.98%, which is a nice benefit for investors.s
3. Carrols Restaurant Group
Carrols Restaurant Group (TAST) is the largest Burger King franchisee in the United States, with over 800 locations. They have had to get creative to deal with challenges facing the industry, including removing the Whopper from its value menu and reducing portion sizes. These changes may be unpopular with some customers, but they still seem to be paying off. Carrols’ stock has risen 228% in the past year.
4. Portillo’s
Portillo’s (PTLO) has navigated the challenges facing the industry quite well, thanks in large part to their expansion strategy. The fast-casual chain keeps growing its footprint, and is benefiting from its loyal customer base as well as investments in technology and staffing. With plans to keep growing at 10% per year, Portillo’s looks poised to capitalize on the strong demand for its Chicago-style menu.
5. Dine Brands Global
Dine Brands Global (DIN) is the parent company of both Applebee’s and IHOP. They are certainly facing their share of challenges, like labor shortages and high food costs. But the company has been making smart strategic moves that position it for long-term growth. While the full benefits may not be seen right away, Dine Brands’ strong free cash flow and innovative approach suggest it can weather the current industry challenges.
6. Yum China Holdings, Inc.
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Yum China Holdings (YUMC) is a powerhouse of the restaurant industry in China. They’re the country’s largest restaurant company, and the operator behind iconic brands like KFC, Pizza Hut, and Taco Bell over there. And they just keep growing–opening over 700 new stores in 2023. Their market cap is $14.96 billion, and Yum China appears ready to capitalize on the massive potential of China’s consumer market.
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This article originally appeared on GOBankingRates.com: 6 Best Restaurant Stocks To Invest In
