The restaurant industry continues to offer investors opportunities to benefit from changing consumer preferences, strong brand loyalty and evolving dining habits. Two prominent names in this space are Starbucks Corporation (SBUX Quick QuoteSBUX - Free Report) and Domino’s Pizza, Inc. (DPZ Quick QuoteDPZ - Free Report) .

While Starbucks has built the business around specialty coffee, customized beverages and the in-store café experience, Domino’s has established a global presence through its pizza offerings, delivery network and technology-driven ordering platform. Both companies rely on repeat customers, operational efficiency and international expansion to support long-term growth. However, their different business models, competitive strategies and financial performance create an interesting investment comparison. So, between Starbucks and Domino’s, which restaurant stock offers a more attractive investment opportunity right now? Let's take a closer look.

The Case for SBUX

Starbucks' Back to Starbucks strategy is gaining traction, supported by better coffeehouse execution and customer engagement. In fourth-quarter fiscal 2026, global comparable sales increased 7.2%, marking the fifth consecutive quarter of growth. North American company-operated comps rose 7.9%, with more than 80% of coffeehouses reporting positive comps, compared with less than 50% a year ago. Improved service, inventory availability and operational consistency are helping strengthen customer traffic.

Starbucks' focus on beverage innovation, food offerings and marketing is likely to support customer traffic and spending. Espresso, Refreshers and Matcha remained strong during the quarter, while new food and beverage options are expected to create more afternoon sales opportunities. Its Matcha business has grown into a platform generating more than $1 billion in sales. Additionally, Starbucks Rewards' 90-day active membership reached a record 36 million, supporting higher customer frequency and sales.

Starbucks' international business remains an important growth driver, with positive comparable sales across several markets. The company added 617 net coffeehouses globally in fiscal 2026 and expects approximately 1,100 international openings in fiscal 2027. Profitability is also improving, with fiscal fourth-quarter operating margin expanding 450 basis points to approximately 14%. Having achieved more than half of its targeted $2 billion in gross cost savings, Starbucks expects fiscal 2027 EPS of $3.15-$3.25, representing nearly 18% growth at the midpoint.

Despite improving operating trends, Starbucks faces some revenue headwinds. Fourth-quarter fiscal 2026 revenues declined 3.9% year over year to $9.1 billion, primarily due to China's transition to a licensed joint venture model. Management expects fiscal 2027 consolidated revenues to decline approximately 1%, while Channel Development revenues are projected to fall about 10%. Fewer company-operated store openings and recent coffeehouse closures could also constrain near-term North American revenue growth.

The Case for DPZ

Domino's continues to demonstrate resilient demand despite a challenging consumer environment. In third-quarter 2026, the company reported order count growth across both delivery and carryout channels and continued to gain market share in the U.S. QSR pizza category. Its value-focused offerings are helping attract customers, including budget-conscious consumers. The company's strong franchise network, established brand and operating capabilities further support its competitive position and long-term growth prospects.

Domino's is focusing on menu innovation and expanding its reach through third-party delivery platforms to capture additional customer occasions. Its newly introduced The Domino product is designed to appeal to consumers seeking individual meal choices while dining in groups, potentially expanding the brand's addressable market. The company is also leveraging its loyalty program and targeted promotions to encourage repeat orders and improve customer frequency. Additionally, its disciplined third-party delivery expansion is helping generate incremental orders while protecting franchisee profitability.

Despite healthy order trends, Domino's faces pressure from cautious consumer spending and an increasingly competitive promotional environment. In the third quarter, U.S. same-store sales increased just 0.3%, as order growth was partly offset by a lower average ticket. Customers purchased fewer items per order across both carryout and first-party delivery channels, reflecting efforts to manage spending. Although the company introduced value deals to support demand, balancing affordability with higher average ticket and franchisee profitability remains a challenge.

Domino's growth outlook is also facing near-term pressure from weaker franchisee profitability and international market challenges. Management lowered its fiscal 2026 U.S. net store opening target to 125-150 locations, citing pressure on franchisee economics and development pipelines. International same-store sales are now expected to remain approximately flat, partly due to continued weakness at Domino's Pizza Enterprises, along with macroeconomic and geopolitical uncertainty. The company also lowered its full-year operating income growth expectation to the mid-single-digit range, excluding specified items and currency impacts.

How Do Estimates Compare for SBUX & DPZ?

The Zacks Consensus Estimate for Starbucks’ fiscal 2027 sales and EPS indicates year-over-year increases of 2.5% and 19.9%, respectively. In the past 60 days, earnings estimates for fiscal 2027 have increased, as shown on the chart.

SBUX Earnings Estimate Trend

Image Source: Zacks Investment Research

The Zacks Consensus Estimate for Domino's 2027 sales and EPS implies year-over-year increases of 1.7% and 8.8%, respectively. In the past 60 days, earnings estimates for 2026 have declined.

DPZ Earnings Estimate Trend

Image Source: Zacks Investment Research

Price Performance & Valuation of SBUX & DPZ

Starbucks’ shares have gained 30.4% in the past year, outperforming the Zacks Retail – Restaurants industry’s fall of 0.7% and the S&P 500’s rise of 12.1%. Meanwhile, DPZ’s shares have declined 21.7% over the same period.

SBUX & DPZ Stock One-Year Price Performance

Image Source: Zacks Investment Research

Starbucks is trading at a forward 12-month price-to-earnings ratio of 32.85X, compared with the industry average of 22.77X. DPZ’s forward 12-month P/E multiple stands at 21.67X.

Image Source: Zacks Investment Research

Investment Consideration

Starbucks appears to be the more attractive investment option, supported by improving comparable sales, successful execution of its turnaround strategy, strong customer loyalty, menu innovation and a recovery in operating margins. The company’s international expansion opportunities and improving earnings outlook further strengthen its growth prospects. Although its valuation remains relatively expensive, the positive earnings estimate revisions and a Zacks Rank #2 (Buy) indicate a favorable outlook.

In contrast, Domino's continues to benefit from order growth, market share gains and a strong franchise network, but weak consumer spending, pressure on average ticket, slower U.S. store expansion and international challenges could limit its near-term performance. Its comparatively lower valuation offers some support, but declining earnings estimates and a Zacks Rank #3 (Hold) imply limited upside visibility.

Therefore, investors may consider buying SBUX for the improving fundamentals and earnings momentum while maintaining a hold stance on DPZ until its sales trends and franchisee profitability show more consistent improvement.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.