The restaurant industry is thriving despite challenges such as rising inflation and interest rates. Consumers are still dining out in full force, leading to surging restaurant sales. For investors looking to capitalize on this trend, here are six restaurant stocks that are particularly appetizing right now.
1. Wingstop (WING) has seen impressive growth by incorporating chicken thighs into their menu to offset fluctuating chicken wing costs. With unit growth of 13% and same-store sales up 18% last year, Wingstop’s stock has gained 380% over the past five years.
2. Ruth’s Hospitality Group, Inc. (RUTH), owner of Ruth’s Chris Steakhouse, has managed to pass along higher costs to customers through strategic price increases. With a stock jump of 26% in the last year and 156% over three years, Ruth’s Hospitality Group offers a dividend yield of 2.98%.
3. Carrols Restaurant Group (TAST), the largest Burger King franchisee in the US, has made strategic changes to deal with industry challenges. Despite removing the Whopper from its value menu and reducing portion sizes, Carrols’ stock has risen 228% in the past year.
4. Portillo’s (PTLO) has navigated industry challenges by expanding its footprint and investing in technology and staffing. With plans to grow at 10% per year, Portillo’s is well-positioned to capitalize on the demand for its Chicago-style menu.
5. Dine Brands Global (DIN), the parent company of Applebee’s and IHOP, is facing challenges like labor shortages and high food costs. However, smart strategic moves and a strong free cash flow suggest that Dine Brands can weather industry challenges for long-term growth.
6. Yum China Holdings (YUMC) is a powerhouse in the Chinese restaurant industry, operating brands like KFC, Pizza Hut, and Taco Bell. With over 700 new stores opened in 2023 and a market cap of $14.96 billion, Yum China is poised to capitalize on China’s consumer market.
Overall, these six restaurant stocks offer investors the opportunity to benefit from the strong performance of the restaurant industry.
