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4 Restaurant Stocks Poised to Thrive Amid Industry Headwinds
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The Zacks Retail-Restaurants industry is navigating a challenging operating environment as consumers remain selective about discretionary spending. Higher menu prices and persistent household expenses are influencing restaurant traffic, while elevated labor, food and occupancy costs are pressuring margins. Still, restaurant operators are finding ways to adapt through value offerings, menu innovation, digital ordering, loyalty programs and targeted restaurant expansion. Brinker International, Inc. (EAT - Free Report) , BJ's Restaurants, Inc. (BJRI - Free Report) , Cracker Barrel Old Country Store, Inc. (CBRL - Free Report) and Bloomin' Brands, Inc. (BLMN - Free Report) are among the companies responding to these industry dynamics.
Industry Description
The Zacks Retail-Restaurants industry comprises several owners and operators of casual, upscale casual, fine dining, full-service and fast-casual restaurants. Some industry participants operate as roasters, marketers and retailers of specialty coffee. Some companies develop, operate and franchise quick-service restaurants worldwide. A few restaurant operators offer cooked-to-order dishes, including noodles and pasta, soups, salads and appetizers. Some industry players develop, own, operate, manage and license restaurants and lounges worldwide. A few companies also run technology-enabled Japanese restaurants in the United States and provide Japanese cuisine through a revolving sushi service model.
4 Trends Shaping the Future of the Restaurant Industry
Value-Conscious Consumers Influence Restaurant Traffic: Consumers continue to weigh restaurant spending against other household expenses, making value an increasingly important factor in dining decisions. Higher menu prices have also encouraged customers to seek promotions, bundled meals and affordable alternatives. Restaurant companies are responding with targeted discounts, loyalty rewards and value-focused menus rather than relying solely on broad-based price increases. Brands that can demonstrate value while maintaining food quality and customer experience could be better positioned to retain traffic.
Cost Pressures Keep Profitability in Focus: Restaurants continue to contend with higher wages, food costs, occupancy expenses and other operating pressures. These challenges are prompting operators to focus on productivity and cost discipline. Investments in restaurant technology, labor-management tools, supply-chain efficiencies and streamlined operating procedures are helping companies offset some of the pressure. Franchise-heavy and asset-light models can also provide companies with avenues to expand while limiting certain capital requirements.
Digital Engagement and Convenience Gain Importance: Convenience remains central to restaurant consumption, supporting demand for delivery, takeout, drive-thru and digital ordering. Mobile apps and loyalty programs are giving restaurant companies additional opportunities to maintain customer relationships and personalize promotions. Meanwhile, artificial intelligence, automation and data analytics are increasingly being explored to improve labor productivity, forecast demand and enhance restaurant operations. These capabilities could become increasingly important as operators seek both sales growth and efficiency gains.
Menu Innovation and Strategic Expansion Drive Growth: Restaurant companies are refreshing menus and introducing limited-time products to generate customer interest and encourage repeat visits. Value meals, premium offerings, beverages and seasonal products are being used to address different consumer spending preferences. At the same time, operators continue to open restaurants in attractive markets and experiment with smaller or convenience-oriented formats. Selective expansion, combined with menu innovation and stronger customer engagement, can provide additional avenues for revenue growth even when industry traffic remains uneven.
Overall, the restaurant industry faces a delicate balance between maintaining affordability for consumers and protecting profitability for operators. Companies are increasingly relying on menu innovation, technology, loyalty initiatives, productivity improvements and disciplined expansion to navigate this environment. These factors are likely to remain important drivers of restaurant performance as the industry progresses through 2026.
Industry Rank Indicates Dull Prospects
The Zacks Restaurant industry is grouped within the broader Retail-Wholesale sector. The industry carries a Zacks Industry Rank of #163, placing it in the bottom 34% of more than 247 Zacks industries.
The group’s Zacks Industry Rank, which is the average of the Zacks Rank of all the member stocks, indicates dull near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than two to one.
The industry’s position in the bottom 50% of the Zacks-ranked industries results from a negative earnings outlook for the constituent companies in aggregate. Before we present a few stocks that you may want to consider for your portfolio, let us take a look at the industry’s recent stock-market performance and valuation picture.
Industry Underperforms the S&P 500 and the Sector
The Zacks Retail-Restaurants industry has underperformed the Zacks S&P 500 composite and its sector over the past year.
Over this period, the industry has declined 13.8% against the Zacks S&P 500 composite’s rise of 15.3%. The sector has decreased 4.9% in the same period.
1-Year Price Performance
Restaurant Industry's Valuation
Based on the forward 12-month P/E, a commonly used multiple for valuing restaurant stocks, the industry is currently trading at 19.94X compared with the S&P 500’s 19.71X. It is down from the sector’s forward 12-month P/E ratio of 25.05X.
Over the past five years, the industry traded as high as 28.47X and as low as 19.94X, the median being 24.69X.
P/E (F12M)
4 Key Picks From the Industry
Bloomin' Brands: The company is benefiting from improving performance at Outback Steakhouse and Bonefish Grill, supported by higher average checks, pricing and productivity gains. U.S. comparable sales rose 2.3% in the second quarter of 2026, while Bonefish Grill comps jumped 8.1%.
Shares of this Zacks Rank #1 (Strong Buy) company have gained 41.2% in the past six months. BLMN’s 2026 sales and earnings are anticipated to rise 0.5% and decline 18.4%, respectively, year over year. You can see the complete list of today’s Zacks #1 Rank stocks here.
Price and Consensus: BLMN
Brinker International: The company is benefiting from Chili’s momentum, supported by positive traffic, menu pricing, everyday value and menu innovation. Fiscal 2027 guidance points to revenue and earnings growth, supported by Chili’s traffic and reimages.
Shares of this Zacks Rank #2 (Buy) company have gained 33.7% in the past six months. EAT’s fiscal 2027 sales and earnings are anticipated to rise 7.9% and 22.5%, respectively, year over year.
Price and Consensus: EAT
BJ's Restaurants:The company is benefiting from sustained traffic growth, menu innovation, effective marketing and better restaurant execution, supporting continued sales and profit expansion. A focus on remodel investments and unit expansion bodes well.
Shares of this Zacks Rank #2 company have gained 5% in the past six months. BJRI’s 2026 sales and earnings are anticipated to rise 4.1% and 4.9%, respectively, year over year.
Price and Consensus: BJRI
Cracker Barrel: The company is benefiting from better traffic trends, retail resilience, lower cost of goods sold and disciplined expense management, while tariff refunds supported adjusted EBITDA growth. Retail comparable sales returned to growth and improved guest metrics, menu initiatives and loyalty engagement support demand recovery.
Shares of this Zacks Rank #2 company have gained 5% in the past six months. CBRL’s fiscal 2027 earnings are anticipated to rise 47.5%, year over year.
View the Zacks #1 Rank List
Image: Bigstock
4 Restaurant Stocks Poised to Thrive Amid Industry Headwinds
The Zacks Retail-Restaurants industry is navigating a challenging operating environment as consumers remain selective about discretionary spending. Higher menu prices and persistent household expenses are influencing restaurant traffic, while elevated labor, food and occupancy costs are pressuring margins. Still, restaurant operators are finding ways to adapt through value offerings, menu innovation, digital ordering, loyalty programs and targeted restaurant expansion. Brinker International, Inc. (EAT - Free Report) , BJ's Restaurants, Inc. (BJRI - Free Report) , Cracker Barrel Old Country Store, Inc. (CBRL - Free Report) and Bloomin' Brands, Inc. (BLMN - Free Report) are among the companies responding to these industry dynamics.
Industry Description
The Zacks Retail-Restaurants industry comprises several owners and operators of casual, upscale casual, fine dining, full-service and fast-casual restaurants. Some industry participants operate as roasters, marketers and retailers of specialty coffee. Some companies develop, operate and franchise quick-service restaurants worldwide. A few restaurant operators offer cooked-to-order dishes, including noodles and pasta, soups, salads and appetizers. Some industry players develop, own, operate, manage and license restaurants and lounges worldwide. A few companies also run technology-enabled Japanese restaurants in the United States and provide Japanese cuisine through a revolving sushi service model.
4 Trends Shaping the Future of the Restaurant Industry
Value-Conscious Consumers Influence Restaurant Traffic: Consumers continue to weigh restaurant spending against other household expenses, making value an increasingly important factor in dining decisions. Higher menu prices have also encouraged customers to seek promotions, bundled meals and affordable alternatives. Restaurant companies are responding with targeted discounts, loyalty rewards and value-focused menus rather than relying solely on broad-based price increases. Brands that can demonstrate value while maintaining food quality and customer experience could be better positioned to retain traffic.
Cost Pressures Keep Profitability in Focus: Restaurants continue to contend with higher wages, food costs, occupancy expenses and other operating pressures. These challenges are prompting operators to focus on productivity and cost discipline. Investments in restaurant technology, labor-management tools, supply-chain efficiencies and streamlined operating procedures are helping companies offset some of the pressure. Franchise-heavy and asset-light models can also provide companies with avenues to expand while limiting certain capital requirements.
Digital Engagement and Convenience Gain Importance: Convenience remains central to restaurant consumption, supporting demand for delivery, takeout, drive-thru and digital ordering. Mobile apps and loyalty programs are giving restaurant companies additional opportunities to maintain customer relationships and personalize promotions. Meanwhile, artificial intelligence, automation and data analytics are increasingly being explored to improve labor productivity, forecast demand and enhance restaurant operations. These capabilities could become increasingly important as operators seek both sales growth and efficiency gains.
Menu Innovation and Strategic Expansion Drive Growth: Restaurant companies are refreshing menus and introducing limited-time products to generate customer interest and encourage repeat visits. Value meals, premium offerings, beverages and seasonal products are being used to address different consumer spending preferences. At the same time, operators continue to open restaurants in attractive markets and experiment with smaller or convenience-oriented formats. Selective expansion, combined with menu innovation and stronger customer engagement, can provide additional avenues for revenue growth even when industry traffic remains uneven.
Overall, the restaurant industry faces a delicate balance between maintaining affordability for consumers and protecting profitability for operators. Companies are increasingly relying on menu innovation, technology, loyalty initiatives, productivity improvements and disciplined expansion to navigate this environment. These factors are likely to remain important drivers of restaurant performance as the industry progresses through 2026.
Industry Rank Indicates Dull Prospects
The Zacks Restaurant industry is grouped within the broader Retail-Wholesale sector. The industry carries a Zacks Industry Rank of #163, placing it in the bottom 34% of more than 247 Zacks industries.
The group’s Zacks Industry Rank, which is the average of the Zacks Rank of all the member stocks, indicates dull near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than two to one.
The industry’s position in the bottom 50% of the Zacks-ranked industries results from a negative earnings outlook for the constituent companies in aggregate. Before we present a few stocks that you may want to consider for your portfolio, let us take a look at the industry’s recent stock-market performance and valuation picture.
Industry Underperforms the S&P 500 and the Sector
The Zacks Retail-Restaurants industry has underperformed the Zacks S&P 500 composite and its sector over the past year.
Over this period, the industry has declined 13.8% against the Zacks S&P 500 composite’s rise of 15.3%. The sector has decreased 4.9% in the same period.
1-Year Price Performance
Restaurant Industry's Valuation
Based on the forward 12-month P/E, a commonly used multiple for valuing restaurant stocks, the industry is currently trading at 19.94X compared with the S&P 500’s 19.71X. It is down from the sector’s forward 12-month P/E ratio of 25.05X.
Over the past five years, the industry traded as high as 28.47X and as low as 19.94X, the median being 24.69X.
P/E (F12M)
4 Key Picks From the Industry
Bloomin' Brands: The company is benefiting from improving performance at Outback Steakhouse and Bonefish Grill, supported by higher average checks, pricing and productivity gains. U.S. comparable sales rose 2.3% in the second quarter of 2026, while Bonefish Grill comps jumped 8.1%.
Shares of this Zacks Rank #1 (Strong Buy) company have gained 41.2% in the past six months. BLMN’s 2026 sales and earnings are anticipated to rise 0.5% and decline 18.4%, respectively, year over year. You can see the complete list of today’s Zacks #1 Rank stocks here.
Price and Consensus: BLMN
Brinker International: The company is benefiting from Chili’s momentum, supported by positive traffic, menu pricing, everyday value and menu innovation. Fiscal 2027 guidance points to revenue and earnings growth, supported by Chili’s traffic and reimages.
Shares of this Zacks Rank #2 (Buy) company have gained 33.7% in the past six months. EAT’s fiscal 2027 sales and earnings are anticipated to rise 7.9% and 22.5%, respectively, year over year.
Price and Consensus: EAT
BJ's Restaurants:The company is benefiting from sustained traffic growth, menu innovation, effective marketing and better restaurant execution, supporting continued sales and profit expansion. A focus on remodel investments and unit expansion bodes well.
Shares of this Zacks Rank #2 company have gained 5% in the past six months. BJRI’s 2026 sales and earnings are anticipated to rise 4.1% and 4.9%, respectively, year over year.
Price and Consensus: BJRI
Cracker Barrel: The company is benefiting from better traffic trends, retail resilience, lower cost of goods sold and disciplined expense management, while tariff refunds supported adjusted EBITDA growth. Retail comparable sales returned to growth and improved guest metrics, menu initiatives and loyalty engagement support demand recovery.
Shares of this Zacks Rank #2 company have gained 5% in the past six months. CBRL’s fiscal 2027 earnings are anticipated to rise 47.5%, year over year.
Price and Consensus: CBRL