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Which Restaurant Stocks Could be the Chipotle (CMG) of 2020?

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Chipotle Mexican Grill, Inc. (CMG - Free Report) has had a blockbuster 2019. This is evident from the shares of the company, which have soared 93.6% in the past year, compared with the industry and the S&P 500’s rally of 20.1% and 27.2%, respectively.

The company’s robust performance can be primarily attributed to increased focus on food safety and enhancing customer experience, improving digital sales, and various other sales-building and strategic initiatives.

As part of its digital innovation, the Zacks Rank #2 (Buy) company has been prioritizing its e-commerce program to gain customer confidence. The company is aggressively trying to make digital ordering more appealing to customers and more efficient for restaurants, in order to drive digital sales and retain customers. In the first, second and third quarters of 2019 digital sales improved 100.7%, 99.1% and 88%, respectively.

Further, there has been a significant increase in digital orders and higher guest satisfaction, following the rollout of its “Smarter Pickup Times” technology. Moreover, the company is making every effort to enhance delivery system. In fact, delivery is now available for more than 97% of its restaurants.


Restaurant Industry Sales Likely to Rise in 2020

Despite most restaurateurs grappling with soft traffic, the industry is likely to witness impressive sales growth in 2020, due to partnerships with delivery channels like DoorDash, Grubhub, Postmates and Uber Eats, digital innovation, rollout of self-service kiosks and loyalty programs.

Considering the trend-driven nature of the industry, restaurateurs have been constantly coming up with new and unusual items for consumers while maintaining complete transparency about ingredients. Moreover, restaurant operators are focusing on driverless delivery systems to augment sales. This is expected to bring down expenses substantially as it does away with delivery personnel. Per Mordor Intelligence, the autonomous delivery robots market is likely to see a CAGR of more than 49.5% during the 2019-2024 period.

Here, we have picked four restaurant stocks which are expected to benefit from the aforementioned factors.

Moreover, these stocks carry a Zacks Rank #1 (Strong Buy) or 2 which make them good investment options. You can see the complete list of today’s Zacks #1 Rank stocks here.

Headquartered in Tampa, FL, Bloomin' Brands, Inc. (BLMN - Free Report) carries a Zacks Rank #2. The company’s shares have gained 23.4% in the past year. The Zacks Consensus Estimate for 2020 earnings is pegged at $1.71, indicating growth of 8.7% from the prior-year quarter. Over the past 60 days, the company’s earnings estimates have witnessed upward revision by 3.6%. Moreover, the company’s long-term earnings is expected to witness robust growth of 9.8%.

Headquartered in Toronto, Canada, Restaurant Brands International Inc. (QSR - Free Report) shares have gained 22.3% in the past year. The Zacks Rank #2 (Buy) company’s earnings in 2020 is estimated to witness growth of 10.3%. Moreover, the company’s long-term earnings is expected to witness robust growth of 10.7%.

Based in Dallas, TX, Brinker International, Inc. (EAT - Free Report) is a Zacks Rank #2 company. Although the company’s shares have declined 4.4% in the past year, its expansion plans, and sales building, digital, operational and remodeling initiatives are likely to drive the stock in 2020. The Zacks Consensus Estimate for fiscal 2020 earnings is pegged at $4.24, indicating an improvement of 7.9% from the year-ago reported figure. Moreover, the company’s long-term earnings is expected to witness robust growth of 7.7%.

El Pollo Loco Holdings, Inc. (LOCO - Free Report) through its subsidiary develops, franchises, licenses and operates quick-service restaurants under the name El Pollo Loco. This Zacks Rank #2 company’s earnings in 2020 is likely to witness growth of 8.2%. Moreover, the company’s long-term earnings is expected to witness robust growth of 10%.

Zacks Top 10 Stocks for 2020

In addition to the stocks discussed above, would you like to know about our 10 top tickers for the entirety of 2020?

These 10 are painstakingly hand-picked from over 4,000 companies covered by the Zacks Rank. They are our primary picks to buy and hold. Start Your Access to the New Zacks Top 10 Stocks >>