Restaurant operators are navigating a market shaped by shifting consumer preferences, inflation-driven cost pressures and intense competition tied to location, pricing and labor availability. In this setting, Nathan's Famous, Inc. (NATH Quick QuoteNATH - Free Report) and Ark Restaurants Corp. (ARKR Quick QuoteARKR - Free Report) stand out as two consumer-facing food companies with brand-led foundations, but very different operating models that shape their risk and earnings profiles. Nathan’s Famous is primarily engaged in marketing its brand and selling products through multiple distribution channels, combining branded product sales, licensing and a franchise network that includes virtual kitchens. Ark Restaurants, meanwhile, is rooted in direct restaurant ownership and operations, running a portfolio of restaurants, bars, fast food concepts and catering operations across multiple U.S. markets.

While NATH leans into a scalable brand platform built around licensing and broader distribution points, ARKR’s model remains more operationally driven, shaped by seasonality, fixed costs and location-specific demand trends. With both facing competitive industry pressures, the question remains: which business structure offers the more attractive setup right now? Let’s take a closer look.

Stock Performance & Valuation: NATH vs. ARKR

NATH (down 13.6%) has underperformed ARKR (down 10.2%) over the past three months. However, in the past year, Nathan’s Famous stock has rallied 18.1% against Ark Restaurants’ loss of 54.6%.

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Meanwhile, NATH is trading at a trailing 12-month enterprise value-to-sales (EV/S) ratio of 2.5X, below its median of 2.6X over the past five years. ARKR’s trailing 12-month EV/S multiple sits at 0.1X, below its last five-year median of 0.3X. While ARKR appears cheap when compared with the Zacks Retail-Wholesale sector average of 1.9X, NATH seems to be expensive.

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Factors Driving Nathan's Famous Stock

Nathan’s Famous is benefiting from a business model that leans heavily on brand reach rather than restaurant footprints alone. One key driver is the company’s multi-channel structure — combining branded product sales, licensing and restaurant operations — which helps broaden distribution across supermarkets, foodservice and franchised formats, including virtual kitchens, while reducing reliance on any single channel for growth.

A second factor is the strength of its high-margin licensing platform, anchored by long-term agreements that allow Nathan’s Famous to monetize its brand through third-party manufacturing, marketing and retail distribution. This structure supports recurring royalty income and extends brand presence across national grocery and club-store channels, reinforcing consumer visibility beyond restaurants.

The third driver is continued expansion and momentum in the Branded Product Program, which fuels sales through foodservice distributors and large-scale customer accounts, supported by the flexibility of the program across varied venues. At the same time, NATH remains focused on managing inflation-linked pressures — particularly beef costs — through pricing mechanisms and customer agreements, helping protect profitability while sustaining operating stability.

Factors Driving Ark Restaurants Stock

Ark Restaurants operates a portfolio of destination-oriented restaurants and bars in high-visibility locations, which gives it significant leverage to strong seasonal demand, tourism flows and event-driven traffic. When these venues perform well, the model can generate outsized benefits from volume recovery and improved utilization across its established footprint.

The Bryant Park situation remains an important catalyst. While it has created uncertainty, any progress toward clarity — whether through lease renewal, extension or resolution of the legal dispute — would materially improve business visibility and could unlock a reset in investor confidence, given the central role of these locations in Ark Restaurants’ broader operating narrative.

ARKR carries long-term optional upside through its interest in New Meadowlands Racetrack, where the potential for a future casino license could expand the company’s food-and-beverage opportunity in a high-traffic entertainment setting. Though the timing is uncertain, the possibility adds a strategic growth lever that differentiates ARKR from many restaurant peers and provides investors with a potential embedded catalyst beyond day-to-day restaurant operations.

Choose NATH Over ARKR Now

While both Nathan’s Famous and Ark Restaurants are navigating a restaurant and consumer landscape shaped by cost pressures and shifting traffic patterns, their current setups point to very different risk-reward profiles — and NATH looks better positioned right now. Although NATH has lagged ARKR over the past three months, its stronger one-year rally highlights a clearer stability-driven narrative anchored by a diversified, brand-led model built around licensing and broad distribution channels. That structure allows Nathan’s Famous to expand its footprint through grocery, foodservice and franchised platforms without relying heavily on day-to-day restaurant traffic, offering investors a more scalable and predictable earnings foundation.

From a valuation perspective, NATH is trading slightly below its own long-term EV/S median, suggesting the stock is not stretched relative to its historical norm even after its solid annual performance. ARKR, meanwhile, has delivered somewhat better short-term performance and screens as deeply discounted on EV/S, but the sharp decline over the past year reflects ongoing uncertainty and weaker investor confidence tied to its more operationally driven restaurant model. With a steadier business structure, stronger longer-term momentum and a valuation that remains reasonable relative to its own history, Nathan’s Famous offers the more attractive opportunity over Ark Restaurants right now.