3 Restaurant Stocks Looking Very Tasty Right Now | Markets

In 2024, the food service industry is projected to bring in $1 trillion in income. In light of this, now is an excellent moment to purchase quality restaurant stocks.

As we examine three quality restaurant stocks, it is important to establish why this trio makes the cut. Three metrics, free cash flow growth, operating margin, and three-year revenue growth rate, were selected. Thereafter, these three names emerged, and all of them are beating the majority of companies in their sector with respect to these figures.

Chipotle Mexican Grill (CMG)

Source: Retail Photographer / Shutterstock.com

Despite growth slowing down in recent quarters, Chipotle Mexican Grill (NYSE:CMG) is one of the best restaurant stocks because of margin expansion, which makes up for slowing growth in revenue with superior operating margins.

Chipotle Mexican Grill has ranked higher than 93% of the 349 firms in the restaurant category thanks to its operating margin of 17% and free cash flow margin of 12%, which puts it higher than 77% of the food sector.

Chipotle’s operating margins can improve further, thanks to initiatives such as an automated production line for salads and burrito bowls and the Autocado robot for scooping avocados.

However, it isn’t like CMG is not growing the top line. The latest financials show a 15% year-on-year revenue gain despite a 3% menu price increase absorbed by CMG customers. Inelastic demand is great for any brand.

Customers are willing to pay extra for Chipotle’s healthier offerings, part of a global trend where consumers, particularly young people and parents, are eager to pay additional cash for more nutritious foods. Sales growth for Chipotle bails out this narrative, with a three-year revenue growth rate per share of 19%; higher than 87% of the sector.

Chipotle also reported a 7.4% increase in foot traffic, defying…

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