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The Zacks Analyst Blog Highlights Carrols Restaurant, Shake Shack, Arcos Dorados, Chipotle Mexican Grill and Darden Restaurants
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For Immediate Release
Chicago, IL – January 19, 2024 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Carrols Restaurant Group Inc. (TAST - Free Report) , Shake Shack Inc. (SHAK - Free Report) , Arcos Dorados Holdings Inc. (ARCO - Free Report) , Chipotle Mexican Grill Inc. (CMG - Free Report) and Darden Restaurants Inc. (DRI - Free Report) .
Here are highlights from Thursday’s Analyst Blog:
5 Restaurant Stocks to Buy on Strong Sales in December
U.S. restaurant businesses thrived in 2023 after an impressive turnaround in 2022. This industry suffered major jolts during the coronavirus outbreak due to lockdowns and other restrictive norms to maintain social distancing. Sales at U.S. restaurants were not impacted much despite severe inflationary pressure.
Strong Restaurant Sales in December
The Department of Commerce reported that sales at U.S. bars and restaurants (adjusted for seasonal variation and holiday sales but not for price changes) came in at $96.1 billion in December, up 8.7% from November. Year over year, spending on restaurants and bars climbed 11.3% in December.
The restaurant space is the main driver of growth for overall retail sales. Steady consumer spending continued in December despite worries that the economy may enter a recession in the near-term. Although higher interest rates made customers concerned, they spent lavishly at restaurants and bars.
The industry body, the National Restaurant Association (NRA) stated “Despite the booming popularity of off-premises restaurant meals and snacks in recent years, pent-up demand for in-restaurant experiences — socialization, celebration, and culinary exploration — is strong, with majority of respondents noting customer desire to gather on-premises.”
Within the retail sector, the Zacks Defined Restaurant Industry is currently placed in the top 33% of all industries with a year-to-date return of 4.1%.
Innovative Measures
The restaurant industry is gradually witnessing improving sales. The improvement can be attributed to the enhancement in fundamentals such as modifications in business processes, staffing, floor plans and technology.
Restaurant operators’ focus on digital innovation, their sales-building initiatives, and cost- saving efforts have been acting as the major catalysts. With the growing influence of the Internet, digital innovation has become the need of the hour. Big restaurant chains are constantly partnering with delivery channels and digital platforms to drive incremental sales.
The restaurant industry is consistently gaining from the spike in off-premise sales, which primarily include delivery, takeout, drive-thru, catering, meal kits and off-site options, such as kiosks and food trucks, owing to the coronavirus pandemic. Per the NRA, more than 60% of restaurant foods are consumed off-premise.
By 2025, off-premise is likely to account for approximately 80% of the industry's growth. The idea of providing off-premise offerings along with a connected curbside service is steadily garnering positive customer feedback.
Our Top Picks
We have narrowed our search to five restaurant stocks that have strong growth potential for 2024. These stocks have seen positive earnings estimate revision in the last 60 days. Each of our picks carries either a Zacks Rank # 1 (Strong Buy) or 2 (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. TAST operates as a Burger King and Popeyes franchisee.
Zacks Rank #1 Carrols Restaurant Group has an expected revenue and earnings growth rate of 3.8% and 14.3%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 7.7% over the last 30 days.
Shake Shack Inc. has been benefiting from various digital initiatives, strong same-shack sales and unit expansion efforts. SHAK’s digital retention continues to be strong. It has also been making more investments in digitization in an effort to sustain its digital guest enhancement strategies in the near term.
Zacks Rank #1 Shake Shack has an expected revenue and earnings growth rate of 15.2% and 39%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 2.2% over the last 60 days.
Arcos Dorados Holdings Inc. operates as a franchisee of McDonald's with its operations divided in Brazil, the North Latin America division, South Latin America and the Caribbean division. ARCO also runs quick-service restaurants in Latin America and the Caribbean.
Arcos Dorados has operations in territories in Latin America and the Caribbean, including Argentina, Aruba, Brazil, Chile, Colombia, Costa Rica, Curaçao, Ecuador, French Guiana, Guadeloupe, Martinique, Mexico, Panama, Peru, Puerto Rico, Uruguay, the U.S. Virgin Islands of St. Croix and St. Thomas, and Venezuela.
Zacks Rank #1 Arcos Dorados has an expected revenue and earnings growth rate of 10.6% and 15.5%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 8% over the last 60 days.
Chipotle Mexican Grill Inc. benefits from its digital efforts, Chipotlane add-ons and marketing initiatives. This along with strength in digital sales, rise in menu prices, and new restaurant openings have been driving CMG.
Also, a strong comparable restaurant sales growth bodes well. Going forward, CMG continues to focus on the stage gate process and on leveraging digital programs to expand access as well as convenience.
Zacks Rank #2 Chipotle Mexican Grill has an expected revenue and earnings growth rate of 13.1% and 18.9%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.1% over the last 30 days.
Darden Restaurants Inc. has been benefiting from strong off-premise offerings, menu innovation and digital initiatives. The focus on strategic acquisitions bodes well. DRI intends to revamp its point-of-sale system to boost guest experience and manage off-premise offerings.
DRI executed several strategies within its Brand Renaissance Plan aimed at fostering growth. These measures encompassed streamlining kitchen systems, enhancing sales planning and scheduling, emphasizing operational excellence to enhance guest satisfaction, innovating new core menu items, enabling customization and strategically investing in promotions. The renovated restaurants are already yielding impressive same-restaurant sales and returns.
Zacks Rank #2 Darden Restaurants has an expected revenue and earnings growth rate of 9.9% and 10.9%, respectively, for the current year (ending May 2024). The Zacks Consensus Estimate for current-year earnings has improved 0.7% over the last 30 days.
Why Haven’t You Looked at Zacks' Top Stocks?
Since 2000, our top stock-picking strategies have blown away the S&P's +6.2 average gain per year. Amazingly, they soared with average gains of +46.4%, +49.5% and +55.2% per year. Today you can access their live picks without cost or obligation.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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The Zacks Analyst Blog Highlights Carrols Restaurant, Shake Shack, Arcos Dorados, Chipotle Mexican Grill and Darden Restaurants
For Immediate Release
Chicago, IL – January 19, 2024 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Carrols Restaurant Group Inc. (TAST - Free Report) , Shake Shack Inc. (SHAK - Free Report) , Arcos Dorados Holdings Inc. (ARCO - Free Report) , Chipotle Mexican Grill Inc. (CMG - Free Report) and Darden Restaurants Inc. (DRI - Free Report) .
Here are highlights from Thursday’s Analyst Blog:
5 Restaurant Stocks to Buy on Strong Sales in December
U.S. restaurant businesses thrived in 2023 after an impressive turnaround in 2022. This industry suffered major jolts during the coronavirus outbreak due to lockdowns and other restrictive norms to maintain social distancing. Sales at U.S. restaurants were not impacted much despite severe inflationary pressure.
Strong Restaurant Sales in December
The Department of Commerce reported that sales at U.S. bars and restaurants (adjusted for seasonal variation and holiday sales but not for price changes) came in at $96.1 billion in December, up 8.7% from November. Year over year, spending on restaurants and bars climbed 11.3% in December.
The restaurant space is the main driver of growth for overall retail sales. Steady consumer spending continued in December despite worries that the economy may enter a recession in the near-term. Although higher interest rates made customers concerned, they spent lavishly at restaurants and bars.
The industry body, the National Restaurant Association (NRA) stated “Despite the booming popularity of off-premises restaurant meals and snacks in recent years, pent-up demand for in-restaurant experiences — socialization, celebration, and culinary exploration — is strong, with majority of respondents noting customer desire to gather on-premises.”
Within the retail sector, the Zacks Defined Restaurant Industry is currently placed in the top 33% of all industries with a year-to-date return of 4.1%.
Innovative Measures
The restaurant industry is gradually witnessing improving sales. The improvement can be attributed to the enhancement in fundamentals such as modifications in business processes, staffing, floor plans and technology.
Restaurant operators’ focus on digital innovation, their sales-building initiatives, and cost- saving efforts have been acting as the major catalysts. With the growing influence of the Internet, digital innovation has become the need of the hour. Big restaurant chains are constantly partnering with delivery channels and digital platforms to drive incremental sales.
The restaurant industry is consistently gaining from the spike in off-premise sales, which primarily include delivery, takeout, drive-thru, catering, meal kits and off-site options, such as kiosks and food trucks, owing to the coronavirus pandemic. Per the NRA, more than 60% of restaurant foods are consumed off-premise.
By 2025, off-premise is likely to account for approximately 80% of the industry's growth. The idea of providing off-premise offerings along with a connected curbside service is steadily garnering positive customer feedback.
Our Top Picks
We have narrowed our search to five restaurant stocks that have strong growth potential for 2024. These stocks have seen positive earnings estimate revision in the last 60 days. Each of our picks carries either a Zacks Rank # 1 (Strong Buy) or 2 (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. TAST operates as a Burger King and Popeyes franchisee.
Zacks Rank #1 Carrols Restaurant Group has an expected revenue and earnings growth rate of 3.8% and 14.3%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 7.7% over the last 30 days.
Shake Shack Inc. has been benefiting from various digital initiatives, strong same-shack sales and unit expansion efforts. SHAK’s digital retention continues to be strong. It has also been making more investments in digitization in an effort to sustain its digital guest enhancement strategies in the near term.
Zacks Rank #1 Shake Shack has an expected revenue and earnings growth rate of 15.2% and 39%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 2.2% over the last 60 days.
Arcos Dorados Holdings Inc. operates as a franchisee of McDonald's with its operations divided in Brazil, the North Latin America division, South Latin America and the Caribbean division. ARCO also runs quick-service restaurants in Latin America and the Caribbean.
Arcos Dorados has operations in territories in Latin America and the Caribbean, including Argentina, Aruba, Brazil, Chile, Colombia, Costa Rica, Curaçao, Ecuador, French Guiana, Guadeloupe, Martinique, Mexico, Panama, Peru, Puerto Rico, Uruguay, the U.S. Virgin Islands of St. Croix and St. Thomas, and Venezuela.
Zacks Rank #1 Arcos Dorados has an expected revenue and earnings growth rate of 10.6% and 15.5%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 8% over the last 60 days.
Chipotle Mexican Grill Inc. benefits from its digital efforts, Chipotlane add-ons and marketing initiatives. This along with strength in digital sales, rise in menu prices, and new restaurant openings have been driving CMG.
Also, a strong comparable restaurant sales growth bodes well. Going forward, CMG continues to focus on the stage gate process and on leveraging digital programs to expand access as well as convenience.
Zacks Rank #2 Chipotle Mexican Grill has an expected revenue and earnings growth rate of 13.1% and 18.9%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.1% over the last 30 days.
Darden Restaurants Inc. has been benefiting from strong off-premise offerings, menu innovation and digital initiatives. The focus on strategic acquisitions bodes well. DRI intends to revamp its point-of-sale system to boost guest experience and manage off-premise offerings.
DRI executed several strategies within its Brand Renaissance Plan aimed at fostering growth. These measures encompassed streamlining kitchen systems, enhancing sales planning and scheduling, emphasizing operational excellence to enhance guest satisfaction, innovating new core menu items, enabling customization and strategically investing in promotions. The renovated restaurants are already yielding impressive same-restaurant sales and returns.
Zacks Rank #2 Darden Restaurants has an expected revenue and earnings growth rate of 9.9% and 10.9%, respectively, for the current year (ending May 2024). The Zacks Consensus Estimate for current-year earnings has improved 0.7% over the last 30 days.
Why Haven’t You Looked at Zacks' Top Stocks?
Since 2000, our top stock-picking strategies have blown away the S&P's +6.2 average gain per year. Amazingly, they soared with average gains of +46.4%, +49.5% and +55.2% per year. Today you can access their live picks without cost or obligation.
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.