Could Now Be The Time To Invest In Restaurant Stocks?
At the start of the pandemic, restaurant stocks in the stock market were thoroughly battered by the severe restrictions and mandates on dining. As such, restaurants were forced to switch to pickup and delivery operations. Fast forward to today, dining restrictions around the country have eased and the restaurant industry seems to be recovering.
As the restaurant industry attempts to make a comeback, some investors are putting up a list of top restaurant stocks to buy this earnings season. Before that, it’s also worth mentioning that some of the world’s most successful companies come from the food industry. One only needs to look at Domino’s Pizza (NYSE: DPZ) stock performance over the years. If you had invested $1,000 in 2004, you would have gained nearly 4,000% at its all-time highs earlier this year.
Even though some of the challenges remain in the restaurant industry, investing in some of the top restaurant stocks could still deliver strong returns over the long term. For instance, Jack in the Box‘s (NASDAQ: JACK) pending acquisition of Del Taco Restaurants is expected to drive long-term growth and positive synergies. Elsewhere, Yum Brands (NYSE: YUM), the parent company of Taco Bell, KFC, and Pizza Hut, broke an industry record. In 2021, the company managed to open 4,180 new restaurants. That averages out to opening a new restaurant every 2 hours in 2021. Considering all these, do you have these restaurant stocks on your watchlist in the stock market today?
Restaurant Stocks To Buy [Or Sell] This Week
- Sweetgreen Inc. (NYSE: SG)
- Dutch Bros Inc. (NYSE: BROS)
- Brinker International Inc. (NYSE: EAT)
- McDonald’s Corporation (NYSE: MCD)
- Chipotle Mexican Grill (NYSE: CMG)
Sweetgreen is a fast-casual restaurant chain that focuses on serving healthy and environment-friendly food. For the most part, it serves salads, warm bowls, and soups to name a few. Besides that, it also offers packaged goods such as dressings, sauces, or packaged produce. Sweetgreen operates roughly 140 restaurants spread around 13 states in the country. Additionally, the company also hires approximately 4,000 employees. Seeing that the company recently went public last November, investors are likely keen on how the company performed in the past quarter.
Last Thursday, the company released its fourth-quarter financials. Total revenue came in at $96.4 million, an increase of 63% year-over-year. The company attributes this increase to its increased same-store sales which increased by 36%. This is compared to the decrease of 28% in 2020. Although the company reported a loss of $66.2 million this quarter, Sweetgreen provided upbeat guidance for the full year. For one, the company expects to open 35 new restaurants. On top of that, it also expects to bring in revenue ranging from $515 million to $535 million for the year. All things considered, is SG stock worth buying?
Next up, is Dutch Bros (BROS), an upcoming name in the U.S. specialty coffee scene. For the most part, it identifies itself as a high-growth operator and franchisor of drive-thru coffee shops. The company caters to coffee-drinker needs by offering them a selection of high-quality handcrafted beverages. For a sense of scale, BROS operates via a network of 471 locations across 11 western U.S. states. And just last week, the coffee chain operator reported its quarterly earnings.
Jumping in, revenue came in at $140.1 million, growing by 55.8% from last year. Moving on, system same shop sales grew by 10.1% in the fourth quarter and 15.3% on a two-year basis. Company-operated gross profit was $16.1 million, up by 15.4% year-over-year. BROS also opened 35 new shops this quarter, surpassing its period record of 33 shops. With BROS continuing to steadily increase its footprint in the coffee industry, would you consider BROS stock?
Brinker International is one of the leading casual dining restaurant companies in the U.S. Its portfolio of restaurants includes the American classic Chili’s Grill & Bar, as well as Maggiano’s Little Italy. Besides that, it has two virtual brands, It’s Just Wings and Maggiano’s Italian Classics. Additionally, Brinker operates or franchises over 1,600 restaurants in 29 countries and two U.S territories. Last month, the company reported its second-quarter fiscal 2022 earnings.
Brinker sales increased to $904.5 million compared to $746.2 million a year ago. This 21% increase is thanks to strong sales growth in its Chili’s and Maggiano’s restaurants. Chili’s brought in increased sales to $791.9 million, up by 12.1% year-over-year. Brinker says sales increased primarily due to higher dining room sales. On the other hand, Maggiano’s segment sales increased due to higher dining and banquet room sales. To be precise, sales were $112.6 million, or up by 78.1% from the year before. Meanwhile, net income per diluted share increased to $0.60 compared to $0.26 last year. Given the strong sales from Brinker’s restaurants, will you be checking out EAT stock?
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Another top restaurant stock to check out is McDonald’s. Being one of the largest fast-food chains in the world, McDonald’s is likely a stranger to no one. With over 39,000 locations in over 100 countries, the company serves over 60 million customers daily. Its product offerings include a wide variety of burgers, chicken products, breakfast items, and desserts. And now, it seems that the fast food company is delving into the metaverse space. In fact, on February 17, McDonald’s applied for 10 metaverse-related patents.
Notably, these patents seek to allow McDonald’s to offer virtual food and beverage products as well as downloadable multimedia files. These include artwork, text, audio and video files, and non-fungible tokens. Moreover, McDonald’s also wants to offer online retail services featuring virtual goods. Trademark attorney Josh Gerben said, “You are hanging out in the metaverse and get hungry. You don’t have to put down your headset. You walk into a McDonald’s and place an order. It arrives at your door a little while later.” Given the potential of the metaverse, is MCD stock one to watch?
Finally, we have Chipotle. As it stands, Chipotle is one of the largest restaurant companies in the world. The Mexican fast-casual restaurant mainly offers a menu of burritos, tacos, and salads. For a sense of scale, it operates more than 2,500 restaurants worldwide, most of which are based in the U.S. Besides that, the company also has a staff of more than 60,000 people.
In February, Chipotle posted its fourth-quarter results that topped expectations. The company brought in $1.96 billion in revenue, a 22% growth year-over-year that exceeded estimates of $1.6 billion. In addition, adjusted diluted earnings per share were $5.58, a 60% increase from $3.48 a year ago. Additionally, it also plans to open between 235 to 250 new restaurants this year, further expanding its Mexican food empire. Given the excellent quarter posted by the company, should you add CMG stock to your portfolio?