Entering text into the input field will update the search result below

Have restaurant stocks reached a bottom?

Shot of a young woman disinfecting the tables while working in a restaurant

Kobus Louw/E+ via Getty Images

As recession risks rise and come to loom over the consumer discretionary space, restaurant stocks have been among the hardest hit.

In recent weeks, key names like Darden Restaurants (NYSE:DRI), BJ’s Restaurant (

Recommended For You

Comments (31)

Have a tip? Submit confidentially to our News team. Found a factual error? Report here.

OverTheHorizon profile picture
Food costs on the rise:

Illuminati Investments profile picture
$JACK is dirt cheaply as well. $WING not so much.
timucin2 profile picture
SHAK is a buy at $40 for long term buy and holders.
GWM8 profile picture
11 Jul. 2022
@timucin2 negative cashflow since 2018, negative profit since covid
The only restaurant stock on my radar is DRI. I sold WEN at $23.
Dandyruckus profile picture
The question investors should center on any brand that franchises; is what is the franchisee debt position, and are they leasing or do they own property. As a multi-brand franchisee who owns our property, we are STILL not immune from basically uncontrollable deteriorating profit margins. That being said… franchisors rely on royalties and ad co-op fees from franchisees to keep their doors open. I do not see restaurants by industry doing well going into the near or mid term future. Labor costs, food costs, lending costs, retail leasing costs, supply chain irregularities, and saturation have been overcome in the past by consumer frequency. That customer frequency is eroding by the day because people simply cannot afford to eat out as frequently because they don't have the money - irregardless of average ticket prices. In the past low price point average meal ticket price restaurants fared better through frequency, but that really doesn’t matter this time. There just are no margins left, and no reason to borrow 3.6 M to put up a QSR (or invest 700k of owner equity). I own CBRL and BLMN, and both make me concerned over their future profitability.
OverTheHorizon profile picture
@Dandyruckus excellent comments Dandy. particularly fit $WING. Over 1400 franchised stores with markets like Houston bumping into each other. Declining sales profits royalties & development fees will dramatically impact company’s bottom line.

GWM8 profile picture
11 Jul. 2022
@Dandyruckus Agree, i own a restaurant and seeing our profit margin cut alot since covid, food cost and labor cost are the biggest issue. But i think BLMN AND QSR still in my radar

I think low price point restaurants is not the place to be invested
in Q3 2022 and into the near/mid term. IMO low priced QSR
have cut costs to the level that quality is not defensible during
an economic downturn for their core customer base.

I feel brands with higher quality positioning will do better as
the US emerges from the next economic slowdown.
Targeting mid level consumers who will continue to have
disposal income will allow these firms to register some EBITDA
in the coming quarters.

CMG CBRL BLMN CAKE TXRH should be able to weather
the upcoming storm....IF their MANAGEMENTs can support
the dining experience and operating structure until the US
economy again picks up its aggregate growth.
(CMG is the case study for effective management over
the past few years)

No reason to own low price QSRs going into a economic slowdown.
amegalo profile picture
I currently own and have added to QSR and WEN. They are not average style restaurant stocks as they cater more to impulse buyers. I also believe the pot is boiling on WEN and believe they will announce something soon . I buy both stocks on general market weakness.
@amegalo why own either? 5x sales and low growth. my only big restaurant holding is arco 1x sales and high growth with
mcd as a powerful backstop. am nibbling on chuy. but wen and qsr ? i wouldnt touch either with a 10-foot pole. dead $$ jmo.
@mp2 I don’t like Chuy.
amegalo profile picture
@mp2 my original WEN shares were acquired at $4. /sh. My QSR at $36+

Both have been good investments . QSR has a good dividend payout and record.. I recently added at 52 week low. And WEN shares added in $16 range..
As I say watch for news on WEN it may become private. I think it’s worth $24 / share.
all the stocks you mention (with the exception of dri) are low-growth selling at huge multiples of sales (5x-10x).

there are a few small ones out there growing at 3x the rate, selling at 1x revenues.

it seems like there are two classes of restaurant stocks out there: one class for institutions running other people’s money … the other class for small value-oriented investors like moi.
@mp2 I won’t touch any restaurant stocks for now. I like DRI but will wait.
@bzb711 i have no opinion about the sector except that it is ferociously competitive and generally overpriced. with the exception of arco i do not buy restaurant stocks (i also don’t buy retail, airline/travel, tobacco, gaming/ entertainment. i have a few cheap finance stocks and generally avoid tech because i’m not competent and have no edge).

Related Stocks

SymbolLast Price% Chg
Darden Restaurants, Inc.
Wingstop Inc.
The Wendy's Company
Chipotle Mexican Grill, Inc.
Yum China Holdings, Inc.
To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.
Is this happening to you frequently? Please report it on our feedback forum.
If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh.