Higher prices are not bothering Americans when it comes to eating out, as they are spending lavishly at restaurants and bars. Higher demand and footfall have seen restaurant sales surging steadily over the past few months after suffering during the pandemic.

Given this situation, investing in restaurant stocks Wingstop Inc. (WING Quick QuoteWING - Free Report) , Carrols Restaurant Group, Inc. , Chuy's Holdings, Inc. , Brinker International, Inc. (EAT Quick QuoteEAT - Free Report) and Starbucks Corporation (SBUX Quick QuoteSBUX - Free Report) would be a prudent choice.

Restaurant Industry on Solid Ground

Restaurant sales totaled $92.7 billion in October, rising 0.3% month over month, the Commerce Department reported on Nov 15. Restaurant sales totaled $91.7 billion in September.

Although retail sales declined marginally by 0.1% in October, sales at restaurants continued to climb. The retail sector has been facing the heat of inflationary pressures but has still managed to put up a great fight. October’s decline in retail sales was the first in seven months.

Restaurants have been playing a key role in boosting retail sales. The U.S. restaurant industry staged a dramatic turnaround last year after suffering for most of 2020 and 2021 as sales nosedived during and after the pandemic.

This year so far has been great for the restaurant industry, with sales totaling $902.5 billion in the first 10 months.

Higher prices have been hampering sales to quite an extent, but inflation has also been showing signs of cooling lately. Consumer price inflation (CPI) remained unchanged month over month in October.

Slowing inflation also saw the Federal Reserve leaving its benchmark interest rates unchanged in the range of 5.25-5.5% in its last two meetings. The Fed has increased interest rates by 525 basis points since March 2022, but expectations are high now that the central bank may soon end its monetary tightening campaign.

This definitely bodes well for the restaurant industry ahead of the all-important holiday season.

Our Choices

Given this situation, it would be ideal to invest in these five restaurant stocks.

Wingstop Inc. franchises and operates restaurants. WING’s operating segments are, namely, Franchise and Company. Wingstop offers cooked-to-order, hand-sauced and tossed chicken wings.

Wingstop’sexpected earnings growth rate for next year is 29.2%. The Zacks Consensus Estimate for current-year earnings has improved 10.6% over the past 60 days. WING currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Carrols Restaurant Group, Inc. is the largest BURGER KING franchisee in the United States, with over 800 restaurants, and has operated BURGER KING restaurants since 1976.

Carrols Restaurant Group’s expected earnings growth rate for the current year is 160%. The Zacks Consensus Estimate for current-year earnings has improved 13.5% over the past 60 days. TAST presently sports a Zacks Rank #1.

Chuy's Holdings, Inc. owns and operates full-service restaurants, serving a distinct menu of authentic Mexican food. CHUY offers a menu that includes appetizers, soups and salads, tacos, burritos, enchiladas, fajitas and combination platters. Chuy's Holdings operates chains throughout Texas, Alabama, Indiana, Kentucky and Tennessee. Chuy's Holdings, Inc. is headquartered in Austin, TX.

Chuy's Holdings’ expected earnings growth rate for the current year is 37.2%. The Zacks Consensus Estimate for current-year earnings has improved 2.7% over the past 60 days. CHUY presently carries a Zacks Rank #2 (Buy).

Brinker International, Inc. primarily owns, operates, develops and franchises various restaurants under the Chili’s Grill & Bar (Chili’s) and Maggiano’s Little Italy (Maggiano’s) brands. EAT took over Chili’s, Inc., a Texas corporation, in September 1983 and completed the acquisition of Maggiano’s in August 1995. Chili’s is a preeminent leader in the bar & grill category of casual dining. The brand has been functioning for over the last 40 years.

Brinker International’s expected earnings growth rate for next year is 25.1%. The Zacks Consensus Estimate for current-year earnings has improved 5.7% over the past 60 days. EAT currently carries a Zacks Rank #2.

Starbucks Corporation is the leading roaster and retailer of specialty coffee globally. In addition to fresh, rich-brewed coffees, SBUX’s offerings include many complimentary food items and a selection of premium teas and other beverages, sold mainly through the company’s retail stores. Starbucks’popular brands include Starbucks coffee, Teavana tea, Seattle's Best Coffee, La Boulange bakery products and Evolution Fresh juices.

Starbucks’ expected earnings growth rate for next year is 17%. The Zacks Consensus Estimate for current-year earnings has improved 1.7% over the past 60 days. SBUX currently has a Zacks Rank #2.