The restaurant industry has faced the brunt of economic challenges, battling high inflation and interest rates in a post-pandemic world. Rising prices and borrowing costs have significantly impacted the sector, with many chains struggling to regain pre-pandemic levels of business.
Despite these adversities, there are shining stars in the industry that have weathered the storm and are poised for growth. Here are three restaurant stocks that have stood the test of time and offer promising opportunities for investors.
Percolating Prosperity: Dutch Bros (BROS)
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Dutch Bros (NYSE:BROS) has emerged as a strong contender in the market, with its shares on an upward trajectory since its public debut in September 2021. Despite its long history since 1992, the coffee chain is expanding aggressively, opening new locations at a remarkable pace.
The company’s innovative “fortressing” strategy, inspired by Domino’s, has proven successful in driving sales and brand recognition. Dutch Bros has seen a remarkable 10% increase in same-store sales, surpassing the challenges posed by rising labor costs.
With BROS stock climbing 25% in 2024 and a promising growth forecast, Dutch Bros presents an enticing opportunity for investors looking to caffeinate their portfolios with steady growth.
Sizzling Success: Brinker International (EAT)
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Brinker International (NYSE:EAT), the parent company of Chili’s and Maggiano’s Little Italy, has defied the odds with its robust performance in recent years. EAT stock has surged 22% over the last three years and an impressive 79% over the last five.
Chili’s continues to be the revenue powerhouse for Brinker International, delivering substantial sales growth in the fiscal third quarter. The company’s strategic menu innovations and value offerings have resonated well with customers, allowing it to outpace industry growth.
With EAT stock up by 62% in the current year and trading at reasonable valuations, Brinker International presents a compelling opportunity for investors seeking savory returns in the restaurant industry.
Flavorful Growth: Chipotle Mexican Grill (CMG)
The Sizzling Success of Chipotle Mexican Grill: A Flavorful Investment Opportunity
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Chipotle Mexican Grill (NYSE:CMG) is the third restaurant stock that is currently as sizzling as a fajita skillet. The fast-casual chain has seen its stock price soar by a mouth-watering 47% in 2024 alone, more than doubling in value over the past three years and skyrocketing an astounding 358% higher than five years ago. Although a single share of CMG currently costs upwards of $3,400, investors rejoice as the company is poised to implement a 50-for-1 stock split, aiming to bring the price down to a more delectable $68 per share, unless demand propels it upward.
The numbers speak louder than a bustling lunch rush. In the first quarter, sales at Chipotle climbed by a hearty 14% to reach $2.7 billion, fueled by a 7% surge in comparable restaurant sales. Not to be outdone, operating margins expanded to 16.3% from 15.5% year-over-year. The restaurant’s operating margin at the store level bloomed by a sumptuous 190 basis points to a lush 27.5%.
But the fiesta doesn’t stop there. Projections from Wall Street paint a picture of continued prosperity, with earnings expected to grow at a tantalizing 22% annually in the long run. With factors like pricing strategies, value offerings, and the enduring popularity of Mexican cuisine stirring the pot, Chipotle Mexican Grill emerges as a delectable option for any investor’s menu.