Investors should be eating up these 9 restaurant stocks, analysts say

By Philip van Doorn

Contrarian investors have opportunities for double-digit percentage gains in inflation-battered stocks, if gas prices come down

These are among the restaurant stocks favored by analysts for double-digit gains over the next 12 months.

Have your spending habits changed? A combination of inflationary pressures appears to be behind a recent selloff in stock prices for restaurant operators.

But many sell-side analysts, or those working for brokerage firms, believe that weakness is overdone, as they see tremendous upside potential for many stocks in the industry.

The national average gasoline price is $4.28 a gallon, according to AAA, up 7% from a month ago, and 34% higher than a year ago. The government's wholesale inflation report for August showed that prices for the transportation of passengers climbed 4.1% in a month.

You might decide against a shopping trip that might not be necessary, since you can order items online, likely with free shipping. And this, along with other rising expenses and rising interest rates, might have you thinking twice before hauling the family for a dining experience.

Among the 18 restaurant stocks in the S&P 1500 Composite Index XX:SP1500, all but one were down for one week through Wednesday, and the group was down a weighted 5.8%, while the S&P 500 SPX was down only 0.4%.

The hardest-hit among the 18 restaurant stocks for the week through Wednesday were Cava Group (CAVA) and Wendy's (WEN), which were down 8.5% each, while the only stock in the group that was up for the week was Aramark (ARMK), which rose 0.3%.

Many investors will shy away from a discretionary industry such as restaurants, as people are facing so much cost pressure. Then again, consider that West Texas Intermediate crude oil (CL00) is close to $100 a barrel (up from $57.42 at the end of last year). Contrarian investors might jump aboard certain restaurant stocks, hoping for gains if oil (and gasoline) prices slide when the conflict between the U.S. and Iran ends.

So here are all 18 restaurant stocks in the S&P Composite 1500, ranked by the percentage of "buy" or equivalent ratings among analysts polled by LSEG. The table includes projected sales growth for calendar 2027, based on consensus estimates among the analysts, as well as consensus price targets:

 
Company                              Share "buy" ratings  Sept. 9 price  Consensus price target  Implied 12-month upside potential  Projected 2027 sales growth 
Dutch Bros.                                          96%         $44.96                  $79.25                                76%                          24% 
Aramark                                              88%         $56.91                  $68.55                                20%                           9% 
Wingstop                                             83%        $110.58                 $203.01                                84%                          16% 
Brinker International                                74%        $215.31                 $268.17                                25%                           5% 
Chipotle Mexican Grill                               70%         $36.03                  $44.07                                22%                          11% 
Cava Group                                           62%         $56.51                  $88.74                                57%                          21% 
McDonald's                                           59%        $253.48                 $316.73                                25%                           5% 
Darden Restaurants                                   59%        $209.42                 $229.73                                10%                           5% 
Shake Shack                                          54%         $63.01                  $83.21                                32%                          15% 
Texas Roadhouse                                      50%        $179.27                 $218.03                                22%                           9% 
Domino's Pizza                                       47%        $321.46                 $383.64                                19%                           2% 
Yum Brands                                           46%        $145.16                 $173.38                                19%                           5% 
Starbucks                                            43%        $100.04                 $111.10                                11%                           3% 
BJ's Restaurants                                     40%         $60.78                  $75.38                                24%                           4% 
Cracker Barrel Old Country Store                     20%         $51.15                  $43.75                               -14%                           2% 
Cheesecake Factory                                   19%        $103.61                  $92.00                               -11%                           7% 
Papa John's International                            19%         $21.63                  $32.34                                50%                          -2% 
Wendy's                                              15%          $7.54                   $7.86                                 4%                           0% 
                                                                                                                                                   Source: LSEG 

For context, the S&P 500 is expected to increase revenue by a weighted 8.7%, based on consensus estimates, according to FactSet. And the S&P Composite 1500 restaurant industry group is expected to increase sales by a weighted 7.2%.

Click on the tickers for more about each company.

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-Philip van Doorn

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09-10-26 1336ET