Yahoo Finance Which Restaurant Stock Could be the Chipotle (CMG) of 2024?
Chipotle Mexican Grill, Inc. CMG experienced a phenomenal 2023, as reflected in its stock performance. Year to date, the company's shares have surged 66.8%, outpacing the industry's 9.1% and the S&P 500's 24.8% rally.
The company is reaping the rewards of its digital initiatives, Chipotlane expansions and marketing strategies. The combination of robust digital sales, increased menu prices and the opening of new restaurants has been a key driver for the company.
Additionally, the substantial growth in comparable restaurant sales is a positive. The company remains committed to the stage gate process, prioritizing digital programs to enhance accessibility and convenience.
This Zacks Rank #3 (Hold) company is making strides in improving its delivery system and capitalizing on its rewards program. Collaborations with Uber Eats and Grubhub are drawing in fresh customers. The company has extended its digital capabilities to Canada. Furthermore, partnering with major third-party delivery aggregators has led to a surge in orders. To enhance convenience on the digital ordering platform, the company has introduced features like unlimited customization, contactless delivery and group ordering.
Restaurant Industry Sales to Rise in 2024
The industry is benefiting from improving restaurant sales. Americans don't seem to be deterred by higher prices when it comes to dining out, as they continue to spend generously at restaurants and bars.
Restaurant operators’ focus on digital innovation, sales-building initiatives and cost-saving efforts has been a catalyst. With the growing influence of the Internet, digital innovation has become the need of the hour. Restaurant operators are partnering with delivery channels and digital platforms to drive incremental sales.
The restaurant industry is consistently gaining from the spike in off-premise sales, which primarily include delivery, takeout, drive-thru, catering, meal kits and off-site options, such as kiosks and food trucks. The efforts are likely to drive restaurant sales in 2024.
Here, we have picked three restaurant stocks that are expected to benefit from the abovementioned factors. These stocks are poised to witness significant growth and could well become the Chipotle of 2024.
Moreover, these stocks carry a Zacks Rank #1 (Strong Buy) or 2 (Buy), which makes them good investment options.
3 Sizzling Hot Restaurant Stocks for 2024
Arcos Dorados Holdings Inc. ARCO, which operates as a franchisee of McDonald's restaurants, sports a Zacks Rank #1. The company’s shares have gained 44.5% so far this year. The Zacks Consensus Estimate for 2024 earnings is pegged at 95 cents, indicating growth of 15.5% from the prior-year quarter. You can see the complete list of today’s Zacks #1 Rank stocks here.
Over the past 60 days, earnings estimates for 2024 have witnessed an upward revision of 8%. Moreover, the company’s long-term earnings are expected to witness robust growth of 12.7%.
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Dallas, TX-based Brinker International, Inc. EAT also has a Zacks Rank #1. The company is benefiting from improved menu pricing and a favorable menu item mix. Furthermore, on the back of sales leverage, menu pricing, favorable commodity mix, lower delivery, and off-premise supplies, its margins have expanded significantly.
The Zacks Consensus Estimate for fiscal 2024 earnings is pegged at $3.57, indicating growth of 26.2% from the prior-year quarter. Over the past 60 days, earnings estimates for 2024 have witnessed an upward revision of 8.2%. Moreover, the company’s long-term earnings are expected to witness 16.6% growth.
FAT Brands Inc. FAT, a multi-brand restaurant company, acquires, develops, markets, and manages quick service, fast casual, casual dining, and polished casual dining restaurant concepts worldwide. The stock carries a Zacks Rank #2.
In 2024, the company’s bottom line is likely to witness an improvement of 27.4% year over year, whereas sales are likely to grow 35.6%. In the past year, shares of the company have gained 15.2%.
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Chipotle Mexican Grill, Inc. (CMG) : Free Stock Analysis Report
Brinker International, Inc. (EAT) : Free Stock Analysis Report
Arcos Dorados Holdings Inc. (ARCO) : Free Stock Analysis Report
FAT Brands Inc. (FAT) : Free Stock Analysis Report
