Investors are eyeing the restaurant industry with enthusiasm as consumers continue to splurge on dining out experiences, driving the sizzling performance of restaurant stocks.
Potbelly Corporation (PBPB)
After issuing a robust preannouncement on Jan. 8, the sandwich restaurant, Potbelly Corporation, projected a substantial increase in same-store sales, estimating a year-over-year surge of 5.9% to 6.4% in Q4. This surpassed its previous guidance of a 4% to 6% increase. The company also reported a significant jump of 11% to 11.5% in systemwide sales for Q4, with a soaring year-over-year same-store sales increase of 11.9%-12% for all of 2023.
Analysts are optimistic, expecting a surge in earnings per share to 25 cents this year from 16 cents in 2023. With a low trailing price-to-sales ratio of 0.77 times and a 30% increase in the previous three months, Potbelly Corporation is undoubtedly a top contender in the restaurant stocks arena.
Shake Shack (SHAK)
Shake Shack reported robust fourth-quarter results with a remarkable 21.4% surge in system-wide sales to $442 million compared to the same period a year earlier, and a net income of $6.8 million, a notable improvement from the net loss of $7.76 million generated in Q4 of 2022.
The company’s strategic expansion through new store launches and licensing deals with franchisees has contributed to its growth. With about 600 owned or licensed U.S. locations as of last December, Shake Shack still has substantial potential for top and bottom-line expansion by opening more stores. Additionally, the company’s focused marketing efforts, particularly in connected TV ads, are expected to significantly boost its brand awareness and sales, given the rising popularity of streaming TV among its target audience. This has led to a 46% climb in the previous month, cementing Shake Shake’s position as a strong contender in the restaurant stocks domain.
Restaurant Brands International (QSR)
Under the leadership of its executive chairman, Patrick Doyle, Restaurant Brands International, the owner of the Tim Hortons and Burger King chains, delivered impressive 2023 results, signaling a strong potential for shareholder returns over the next decade. The company witnessed a considerable revenue increase from $6.05 billion to $7.02 billion, along with a surge in operating income to $2.14 billion from $2.02 billion. Furthermore, it reported a remarkable 6% rise in comparable sales last quarter.
With strategic plans in place, including diversifying Tim Hortons’ menu to improve afternoon sales and introducing more cold beverages, as well as modernizing Burger King restaurants and intensifying the marketing of the brand, Restaurant Brands International continues to solidify its position in the market. With a nearly 25% advance since October, QSR is clearly on the radars of astute restaurant stock investors.
On the date of publication, Larry Ramer did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
