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Restaurant stocks may post Q1 FY26 upside as demand, value deals and digital ordering support sales.
Chipotle's growth is driven by menu innovation, digital strength and unit expansion efforts.
Shake Shack sales gain from new units and licensing, but costs and investments may pressure margins.
The restaurant industry’s top line in first-quarter 2026 is likely to have benefited from steady demand, particularly in quick-service and fast-casual formats. Value meals and combo deals bode well for traffic among price-conscious consumers. Limited-time offers might have encouraged repeat visits, while menu innovation and premium add-ons appear to have supported higher ticket sizes. Digital ordering, including apps and delivery, continues to act as a growth lever, helping brands expand reach and drive sales.
On the bottom line, easing commodity inflation appears to have provided some relief. Costs for items like edible oils, dairy and select proteins have shown signs of stabilization, which bodes well for margins. Ongoing efficiency efforts, including improved labor scheduling and menu simplification, are also helping control costs. Pricing actions taken earlier still seem to be supporting profitability, offering some cushion to margins.
However, the top line might have faced some pressure from uneven consumer spending. Lower-income consumers remain cautious, which might have been weighing on traffic in casual dining. At the same time, aggressive discounting by peers and increased competition from ready-to-eat grocery offerings might have limited growth. International markets also appear to be facing macro headwinds, which might have impacted reported revenues.
Margins, meanwhile, continue to face challenges. Labor costs remain elevated and do not show meaningful signs of easing. Rising rent and utility expenses have been adding to the pressure, especially for dine-in-heavy operators. Higher spending on marketing, loyalty programs and technology has also been weighing on profitability in the near term. For delivery-focused brands, elevated third-party fees remain a key drag on margins.
How to Make the Right Pick?
Given the wide range of companies in this space, the task is by no means easy. While the task of being sure of the outperformers is impossible, our proprietary methodology — a positive Earnings ESP, along with a favorable Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — makes it relatively simple. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP is our proprietary methodology for identifying stocks with high chances of delivering a surprise in their upcoming earnings announcements. It shows the percentage difference between the Most Accurate Estimate and the Zacks Consensus Estimate. Our research shows that for stocks with the aforementioned combination, the chance of a positive earnings surprise is as high as 70%.
Our Choices
Here we have discussed in detail restaurant companies that are likely to beat estimates this time:
The Cheesecake Factory is likely to have benefited from menu innovation and digital engagement in the first quarter of 2026, with offerings like “bites and bowls” driving higher orders and sales. Strong marketing efforts, along with solid performance from Flower Child and the Fox Restaurant Concepts portfolio, are also likely to have aided the top line, while unit expansion further supports growth. On the bottom line, margins are likely to have benefited from operational efficiency, cost discipline and favorable commodity trends, along with strong restaurant-level profitability across key concepts.
The Zacks Consensus Estimate for first-quarter 2026 earnings is pegged at $1.00 per share, indicating growth of 7.5% from 93 cents reported in the prior-year quarter.
The Cheesecake Factory Incorporated Price and EPS Surprise
Chipotle Mexican Grill, Inc. (CMG - Free Report) is scheduled to report first-quarter 2026 results on April 29. CMG currently has an Earnings ESP of +0.48% and a Zacks Rank #3.
Chipotle is likely to have delivered top-line growth in first-quarter 2026, supported by its focus on high-quality ingredients, menu innovation and the “Recipe for Growth” strategy, which has been driving better throughput and transactions. Strong digital engagement, a growing rewards base and steady unit expansion also bode well for revenues. However, profits are likely to have declined due to continued investments in technology, higher labor costs and reinvestment of efficiency gains into staffing and guest experience, which might have weighed on margins.
The Zacks Consensus Estimate for first-quarter 2026 earnings is pegged at 24 cents per share, implying a decline of 17.2% from 29 cents reported in the prior-year quarter.
Chipotle Mexican Grill, Inc. Price and EPS Surprise
CAVA Group, Inc. (CAVA - Free Report) is likely to report an increase in earnings and revenues in the first quarter of 2026. CAVA currently has an Earnings ESP of +5.52% and a Zacks Rank #3.
CAVA is likely to have seen top-line growth in first-quarter 2026, supported by strong same-store sales, steady traffic trends and continued unit expansion, along with benefits from pricing and favorable product mix. Its healthy, customizable menu offering also appears to have resonated well with consumers, aiding demand. However, the bottom line is likely to have been pressured by higher food and packaging costs, increased labor investments, elevated third-party delivery mix and ongoing spending on technology and growth initiatives, which might have weighed on margins.
The Zacks Consensus Estimate for first-quarter 2026 earnings is pegged at 16 cents per share, indicating a decline of 27.3% from 22 cents reported in the prior-year quarter.
Shake Shack Inc. (SHAK - Free Report) is scheduled to report first-quarter 2026 results on May 7. SHAK currently has an Earnings ESP of +23.32% and a Zacks Rank #3.
Shake Shack is likely to have seen top-line growth supported by menu innovation, new restaurant openings and strong momentum in its licensing business, aided by robust global partner support and rising international demand. Digital initiatives are also expected to have enhanced customer engagement and sales. However, the bottom line is likely to have been pressured by elevated beef costs, along with continued investments in marketing and the impact of weather-related disruptions, which might have weighed on margins.
The Zacks Consensus Estimate for first-quarter 2026 earnings is pegged at 11 cents per share, implying a decline of 21.4% from 14 cents reported in the prior-year quarter.
View the Zacks #1 Rank List
Image: Shutterstock
4 Restaurant Stocks Showing Strong Earnings Surprise Potential
Key Takeaways
The restaurant industry’s top line in first-quarter 2026 is likely to have benefited from steady demand, particularly in quick-service and fast-casual formats. Value meals and combo deals bode well for traffic among price-conscious consumers. Limited-time offers might have encouraged repeat visits, while menu innovation and premium add-ons appear to have supported higher ticket sizes. Digital ordering, including apps and delivery, continues to act as a growth lever, helping brands expand reach and drive sales.
On the bottom line, easing commodity inflation appears to have provided some relief. Costs for items like edible oils, dairy and select proteins have shown signs of stabilization, which bodes well for margins. Ongoing efficiency efforts, including improved labor scheduling and menu simplification, are also helping control costs. Pricing actions taken earlier still seem to be supporting profitability, offering some cushion to margins.
However, the top line might have faced some pressure from uneven consumer spending. Lower-income consumers remain cautious, which might have been weighing on traffic in casual dining. At the same time, aggressive discounting by peers and increased competition from ready-to-eat grocery offerings might have limited growth. International markets also appear to be facing macro headwinds, which might have impacted reported revenues.
Margins, meanwhile, continue to face challenges. Labor costs remain elevated and do not show meaningful signs of easing. Rising rent and utility expenses have been adding to the pressure, especially for dine-in-heavy operators. Higher spending on marketing, loyalty programs and technology has also been weighing on profitability in the near term. For delivery-focused brands, elevated third-party fees remain a key drag on margins.
How to Make the Right Pick?
Given the wide range of companies in this space, the task is by no means easy. While the task of being sure of the outperformers is impossible, our proprietary methodology — a positive Earnings ESP, along with a favorable Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — makes it relatively simple. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP is our proprietary methodology for identifying stocks with high chances of delivering a surprise in their upcoming earnings announcements. It shows the percentage difference between the Most Accurate Estimate and the Zacks Consensus Estimate. Our research shows that for stocks with the aforementioned combination, the chance of a positive earnings surprise is as high as 70%.
Our Choices
Here we have discussed in detail restaurant companies that are likely to beat estimates this time:
The Cheesecake Factory Incorporated (CAKE - Free Report) is scheduled to report first-quarter 2026 results on April 29. CAKE currently carries a Zacks Rank #3 and has an Earnings ESP of +0.17%. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Cheesecake Factory is likely to have benefited from menu innovation and digital engagement in the first quarter of 2026, with offerings like “bites and bowls” driving higher orders and sales. Strong marketing efforts, along with solid performance from Flower Child and the Fox Restaurant Concepts portfolio, are also likely to have aided the top line, while unit expansion further supports growth. On the bottom line, margins are likely to have benefited from operational efficiency, cost discipline and favorable commodity trends, along with strong restaurant-level profitability across key concepts.
The Zacks Consensus Estimate for first-quarter 2026 earnings is pegged at $1.00 per share, indicating growth of 7.5% from 93 cents reported in the prior-year quarter.
The Cheesecake Factory Incorporated Price and EPS Surprise
The Cheesecake Factory Incorporated price-eps-surprise | The Cheesecake Factory Incorporated Quote
Chipotle Mexican Grill, Inc. (CMG - Free Report) is scheduled to report first-quarter 2026 results on April 29. CMG currently has an Earnings ESP of +0.48% and a Zacks Rank #3.
Chipotle is likely to have delivered top-line growth in first-quarter 2026, supported by its focus on high-quality ingredients, menu innovation and the “Recipe for Growth” strategy, which has been driving better throughput and transactions. Strong digital engagement, a growing rewards base and steady unit expansion also bode well for revenues. However, profits are likely to have declined due to continued investments in technology, higher labor costs and reinvestment of efficiency gains into staffing and guest experience, which might have weighed on margins.
The Zacks Consensus Estimate for first-quarter 2026 earnings is pegged at 24 cents per share, implying a decline of 17.2% from 29 cents reported in the prior-year quarter.
Chipotle Mexican Grill, Inc. Price and EPS Surprise
Chipotle Mexican Grill, Inc. price-eps-surprise | Chipotle Mexican Grill, Inc. Quote
CAVA Group, Inc. (CAVA - Free Report) is likely to report an increase in earnings and revenues in the first quarter of 2026. CAVA currently has an Earnings ESP of +5.52% and a Zacks Rank #3.
CAVA is likely to have seen top-line growth in first-quarter 2026, supported by strong same-store sales, steady traffic trends and continued unit expansion, along with benefits from pricing and favorable product mix. Its healthy, customizable menu offering also appears to have resonated well with consumers, aiding demand. However, the bottom line is likely to have been pressured by higher food and packaging costs, increased labor investments, elevated third-party delivery mix and ongoing spending on technology and growth initiatives, which might have weighed on margins.
The Zacks Consensus Estimate for first-quarter 2026 earnings is pegged at 16 cents per share, indicating a decline of 27.3% from 22 cents reported in the prior-year quarter.
CAVA Group, Inc. Price and EPS Surprise
CAVA Group, Inc. price-eps-surprise | CAVA Group, Inc. Quote
Shake Shack Inc. (SHAK - Free Report) is scheduled to report first-quarter 2026 results on May 7. SHAK currently has an Earnings ESP of +23.32% and a Zacks Rank #3.
Shake Shack is likely to have seen top-line growth supported by menu innovation, new restaurant openings and strong momentum in its licensing business, aided by robust global partner support and rising international demand. Digital initiatives are also expected to have enhanced customer engagement and sales. However, the bottom line is likely to have been pressured by elevated beef costs, along with continued investments in marketing and the impact of weather-related disruptions, which might have weighed on margins.
The Zacks Consensus Estimate for first-quarter 2026 earnings is pegged at 11 cents per share, implying a decline of 21.4% from 14 cents reported in the prior-year quarter.
Shake Shack, Inc. Price and EPS Surprise
Shake Shack, Inc. price-eps-surprise | Shake Shack, Inc. Quote