10 Buy-The-Dip Restaurant Stocks to Invest in Now

Published July 25, 2022 at 9:23 am EDT Updated August 19, 2026 at 8:06 am EDT

In this article, we discuss 10 buy the dip restaurant stocks to invest in now.

Since the restaurant industry has been hit hard by the ongoing macro headwinds, valuations have significantly contracted. However, market experts are debating whether to start purchasing beaten down restaurant stocks or if it’s time to put a halt on a buying spree. The more optimistic industry analysts have reported that the impact of inflation and softer demand has already been priced into most restaurant stocks.

According to Jefferies analyst Nick Setyan, after being hit with the pandemic and post-pandemic financial crisis, franchised and company-owned restaurant valuations now present highly attractive risk/reward ratios. He is positive about the restaurant industry as a whole, apart from a few names, and believes that the sector will prove to be largely recession-proof. The analyst observed that restaurants benefit in a recessionary environment, as food costs drop and labor inflation is controlled. Similarly, Bank of America analysts Sara Senatore and Katherine Griffin named Texas Roadhouse, Inc. (NASDAQ:TXRH) and Darden Restaurants, Inc. (NYSE:DRI) as their top picks based on historical performance in recessionary periods.

Some of the top buy the dip restaurant stocks to invest in include Starbucks Corporation (NASDAQ:SBUX), Domino’s Pizza, Inc. (NYSE:DPZ), and Dave & Buster’s Entertainment, Inc. (NASDAQ:PLAY).

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Our Methodology

We selected these stocks based on their long-term growth potential, optimistic analyst ratings, and strong hedge fund sentiment. We have mentioned the year-to-date share price declines as of July 22. The hedge fund sentiment was gauged from Insider Monkey’s Q1 2022 database of 900+ elite hedge funds.

Buy the Dip Restaurant Stocks to Invest in Now

10. Chuy’s Holdings, Inc. (NASDAQ:CHUY)

Number of Hedge Fund Holders: 11

YTD Share Price Decline as of July 22: 31.31%

Chuy’s Holdings, Inc. is headquartered in Austin, Texas, and its restaurants offer Tex-Mex cuisine. The company has a chain of restaurants throughout 17 states. On June 24, Wedbush analyst Nick Setyan reiterated an Outperform rating on Chuy’s Holdings, Inc. but lowered the price target on the shares to $30 from $37. As per the analyst, management’s commentary reflects some top-line softness lately, and fresh chicken and produce exposure means higher cost than present estimates. The analyst sees Chuy’s Holdings, Inc. as among the best positioned casual diners to survive any likely hurdles in the future. Chuy’s Holdings, Inc. stock has declined 31.31% year to date, which makes it an attractive restaurant name to buy on the dip.

Among the hedge funds tracked by Insider Monkey, Chuy’s Holdings, Inc. was part of 11 hedge fund portfolios at the end of Q1 2022, up from 7 funds in the prior quarter. The collective stakes increased to $27.8 million in Q1 from $16.2 million in the last quarter. Jim Simons’ Renaissance Technologies is the biggest position holder in the company, with 270,100 shares worth about $7.3 million.

In addition to Starbucks Corporation, Domino’s Pizza, Inc., and Dave & Buster’s Entertainment, Inc., Chuy’s Holdings, Inc. is one of the notable restaurant stocks to buy on the dip.

9. Wingstop Inc. (NASDAQ:WING)

Number of Hedge Fund Holders: 21

YTD Share Price Decline as of July 22: 39.36%

Headquartered in Addison, Texas, Wingstop Inc. (NASDAQ:WING) is an American multinational chain of themed fast casual fast food restaurants that sell chicken wings. Analysts are positive on the restaurant prospects as commodity inflation is absorbed somewhat easily and the industry tackles staff shortages. Wingstop Inc. is one of the beaten down restaurant stocks to invest in now, with shares down about 40% from their peak. Wingstop Inc. is also a dividend payer. The company has been distributing quarterly dividends since 2016.

Truist analyst Jake Bartlett on July 1 maintained a Buy recommendation on Wingstop Inc. but lowered the price target on the shares to $130 from $160 as part of a broader research note on Restaurants. The analyst is optimistic about the store reopening data from latest web scrapes. He strengthened his FY22 net openings outlook to 233 from 222 as domestic openings seem to have exceeded expectations, but attributed his slashed price target to increasing macro risks.

According to Insider Monkey’s data, 21 hedge funds were bullish on Wingstop Inc. at the end of March 2022, with collective stakes worth $212 million, up from 18 funds in the prior quarter, holding stakes in the company valued at $186.4 million. Terry Smith’s Fundsmith LLP held the leading position in Wingstop Inc., comprising 832,538 shares worth $97.6 million.

Here is what ClearBridge Investments has to say about Wingstop Inc. in its Q2 2021 investor letter:

“Other new buys included Wingstop. Wingstop, meanwhile, in the consumer discretionary sector, is doing to chicken wings what Domino’s did to pizza. With a strong digital model, the franchise-based business has a long runway for growth with an existing base of 1,500 stores expanding to potentially 6,000 units and compelling franchisee economics.”

8. Dine Brands Global, Inc. (NYSE:DIN)

Number of Hedge Fund Holders: 24

YTD Share Price Decline as of July 22: 12.41%

Dine Brands Global, Inc. (NYSE:DIN) is a California-based food and beverage company that franchises full-service restaurants – Applebee’s Neighborhood Grill & Bar and International House of Pancakes (IHOP). The stock has declined over 12% year to date as of July 22, however, IHOP has become an international brand and Applebee’s is a mainstream American casual dining spot, which ensures that demand and revenue will remain stable and the company can weather the macro environment. This makes Dine Brands Global, Inc. one of the best buy the dip restaurant stocks to invest in now.

On July 19, Raymond James analyst Brian Vaccaro reaffirmed an Outperform rating on Dine Brands Global, Inc. but lowered the price target on the stock to $85 from $95 ahead of the Q2 earnings report on August 9. The analyst expects 2Q22 revenue to rise 2% year over year to $238.0 million, reflecting Applebee’s average weekly sales jumped 12.8% versus 2019 and IHOP’s average weekly sales increased 0.4% compared to 2019. The analyst thinks shares are undervalued given the company’s 100% franchise model, increasing unit growth, and a higher cash position, which supports additional share repurchases and a robust dividend yield.

Among the hedge funds tracked by Insider Monkey, 24 funds were long Dine Brands Global, Inc. at the end of Q1 2022, with combined stakes worth about $219 million. Glenn Fuhrman and John Phelan’s MSD Capital is the largest shareholder of the company, with 740,545 shares worth $57.7 million.

7. The Wendy’s Company (NASDAQ:WEN)

Number of Hedge Fund Holders: 25

YTD Share Price Decline as of July 22: 13.69%

The Wendy’s Company is an Ohio-based holding company for Wendy’s, the American fast food chain. The Wendy’s Company is a popular American restaurant that is present in 30 countries. With an average of 12 million annual loyalty members, The Wendy’s Company has approximately 7,000 outlets worldwide. The stock is currently down about 14% year to date, which makes it a good time to buy it on the dip.

On July 20, Deutsche Bank analyst Brian Mullan raised the price target on The Wendy’s Company to $24 from $20 and kept a Buy rating on the shares ahead of the Q2 results. The analyst said that investors are awaiting an “in-linish” U.S. same store-sales result, compared to current consensus of over 2.6%.

Among the hedge funds tracked by Insider Monkey, 25 funds were long The Wendy’s Company at the conclusion of Q1 2022, compared to 26 funds in the earlier quarter. Nelson Peltz’s Trian Partners held the leading stake in the company, consisting of 25.3 million shares worth $556.5 million.

Like Starbucks Corporation, Domino’s Pizza, Inc., and Dave & Buster’s Entertainment, Inc., elite hedge funds are pouring into The Wendy’s Company.

6. Domino’s Pizza, Inc. (NYSE:DPZ)

Number of Hedge Fund Holders: 27

YTD Share Price Decline as of July 22: 27.83%

Domino’s Pizza, Inc. is an American multinational pizza restaurant chain. On July 21, the company declared a $1.10 per share quarterly dividend, in line with previous. The dividend is payable on September 30, for shareholders of record on September 15. The stock has dropped about 28% year to date.

Oppenheimer analyst Brian Bittner raised the price target on Domino’s Pizza, Inc. to $445 from $435 on July 22 and reiterated an Outperform rating on the shares. As per the analyst, demand trends showcased a sequential improvement in Q2 mainly due to higher carry-out growth, and management reaffirmed techniques to fix staffing issues in its delivery business.

Among the hedge funds tracked by Insider Monkey, Domino’s Pizza, Inc. was part of 27 hedge fund portfolios at the end of March 2022, with collective stakes worth $1.8 billion. Bill Ackman’s Pershing Square was the largest shareholder of the company, with more than 2 million shares worth $841.70 million.

Here is what LRT Capital Management has to say about Domino’s Pizza, Inc. in its Q1 2022 investor letter:

“Domino’s Pizza is the world’s largest franchisor of pizza restaurants with over 13,800 locations in 85 countries. As for any restaurant operator, the key metric to consider for Domino’s Pizza is same-store-sales (SSS) growth. Growing same-store-sales are ultimately how a restaurant business increases earnings from its existing assets. The company continues to impress in this criterion with SSS having grown in the U.S. for 40 consecutive quarters, and an astounding 109 straight quarters internationally.

Two-thirds of the company’s stores are currently abroad, and the international segment remains the company’s largest growth opportunity, as the penetration of convenient fast food remains lower abroad than in the United States. Pizza is a product with exceptionally high gross margins, one that “translates” well across different cultures, and one that literally “travels well”, not losing much of its appeal when delivered in a cardboard box. The rise of 3rd party delivery platforms such as Uber Eats, Doordash and Grubhub is challenging the pizza category as it has expanded the number of choices consumers have for convenient takeout. However, the economics of food delivery remain challenging for most restaurants and platforms alike57, while pizza delivery continues to be highly profitable. Regardless of how the “delivery wars” currently playing out end, Domino’s financial results show little impact of this increased competition, and the company continues to deliver exceptional financial performance.

Domino’s Pizza stock is not optically cheap based on forward earnings, however, the company has routinely reported earnings growth of over 20% in almost all quarters since 2009. Given the company’s high growth rate, international growth opportunities, and capital light business model, which allows for returns on invested capital of over 40%, we are happy to continue to hold the shares.”

5. Darden Restaurants, Inc. (NYSE:DRI)

Number of Hedge Fund Holders: 32

YTD Share Price Decline as of July 22: 18.44%

Darden Restaurants, Inc. is an American company that owns multiple fine dining and casual restaurants such as Eddie V’s, The Capital Grille, Olive Garden Italian Restaurant, LongHorn Steakhouse, Bahama Breeze, Seasons 52, Yard House, and Cheddar’s Scratch Kitchen. The stock has declined about 18.5% year to date as of July 22.

On June 27, BofA analyst Katherine Griffin reinstated coverage of Darden Restaurants, Inc. with a Buy rating and a $145 price target. The demand for Darden Restaurants, Inc. is “benign if not favorable”, said the analyst, who sees Darden Restaurants, Inc. well-positioned to capture volume growth “in all forms” from off-premise channels and high demand for dining occasions.

According to Insider Monkey’s data, 32 hedge funds were bullish on Darden Restaurants, Inc. at the end of Q1 2022, up from 30 funds in the last quarter. Brandon Haley’s Holocene Advisors is the largest shareholder of the company, with 482,026 shares worth $64 million.

4. Dave & Buster’s Entertainment, Inc. (NASDAQ:PLAY)

Number of Hedge Fund Holders: 36

YTD Share Price Decline as of July 22: 12.12%

Dave & Buster’s Entertainment, Inc. operates full-service restaurants with video arcades in the United States and Canada. On July 21, Raymond James analyst Brian Vaccaro removed Dave & Buster’s Entertainment, Inc. from the firm’s Analyst Current Favorites list, citing its lack of short-term catalysts. The analyst still kept a Strong Buy rating on the stock, saying that latest sales remain strongly positive versus 2019 and the company can maintain greater margins in a post-COVID environment on the back of operational and efficiency gains.

According to Insider Monkey’s data, 36 hedge funds were bullish on Dave & Buster’s Entertainment, Inc. at the end of the first quarter of 2022, with collective stakes worth $762.5 million, up from 28 funds in the last quarter, holding stakes in the company valued at $436.75 million. Scott Ross’ Hill Path Capital is the leading shareholder of the company, with more than 5 million shares worth $246.3 million.

3. Chipotle Mexican Grill, Inc. (NYSE:CMG)

Number of Hedge Fund Holders: 38

YTD Share Price Decline as of July 22: 20.31%

Chipotle Mexican Grill, Inc. (NYSE:CMG) is an American chain of fast casual restaurants in the United States, the United Kingdom, Canada, Germany, and France. The shares declined 20.31% year to date as of July 22. UBS analyst Dennis Geiger reiterated a Buy rating on Chipotle Mexican Grill, Inc. on July 19 and lowered the firm’s price target on the stock to $1,900 from $2,100 ahead of its Q2 results. As per the analyst, investors expect that the company’s comps are slowing from approximately 11% expected in Q2 to 7.7% consensus for Q3. He added that while sentiment on Chipotle Mexican Grill, Inc. is skewed negatively in the short-term, the long-term growth potential remains intact.

According to Insider Monkey’s data, 38 hedge funds were bullish on Chipotle Mexican Grill, Inc. at the end of Q1 2022, down from 47 funds in the earlier quarter. Bill Ackman’s Pershing Square is the biggest shareholder of the company, with 1.11 million shares worth $1.76 billion.

Here is what Ensemble Capital has to say about Chipotle Mexican Grill, Inc. in its Q1 2022 investor letter:

“Chipotle (6.0% weight in the Fund): In a recent blog post called GREAT COMPANIES ARE FORGED DURING CRISIS we discussed why companies with economic moats, relevant products and services, and those that create stakeholder value are more resilient in the face of crisis than the average company. Less advantaged competitors, in turn, struggle, which creates opportunities for great companies to get even better.

We think Chipotle navigated the COVID environment better than any major quick-serve restaurant and has consequently gone from strength to strength. Indeed, from March 1, 2020 to March 31, 2022, Chipotle shares gained 106% versus the S&P 500 Restaurants Index’s 28% return, including dividends.

To be sure, going into 2020, Chipotle had some recent experience in managing through a crisis. Its self-inflicted foodborne illness crisis that occurred in 2015 and 2016 threatened to permanently impair Chipotle’s brand value and damage customer trust. While the company made some changes at the top, bringing in Brian Niccol as CEO, and reorganized its food preparation processes, it did not abandon its mission of providing customers with freshly-prepared, sustainably-sourced food. Even at the nadir of its crisis, the average revenue of a Chipotle restaurant remained in line with the average fast casual restaurant in the US.

When COVID arrived, Chipotle quickly made changes to its strategy. It had planned on doing a marketing push for its new Queso Blanco cheese dip in March 2020 but pivoted to free delivery to ensure its customers could get Chipotle during quarantine. Because Chipotle restaurants are all company-owned (versus most fast-food chains being franchise models), it was nimble amid panic in the restaurant industry. The company continued to build restaurants (161 new stores in 2020) and seized the opportunity to move into prime locations and add more “Chipotlane” drive-thrus…” (Click here to see the full text)

2. Yum! Brands, Inc. (NYSE:YUM)

Number of Hedge Fund Holders: 45

YTD Share Price Decline as of July 22: 12.51%

Yum! Brands, Inc. (NYSE:YUM) is an American fast food corporation that operates under the KFC, Pizza Hut, Taco Bell, and The Habit Burger Grill brands. On July 23, Barron’s said that Yum! Brands, Inc. looks particularly attractive in a macro environment that represents soft growth. The stock has declined 12.5% year to date.

On July 21, Citi analyst Jon Tower reiterated a Buy rating and lowered the firm’s price target on the shares to $145 from $148. According to the analyst, Yum! Brands, Inc. shares exhibit “limited volatility” around earnings, who see an opportunity for the management to reaffirm higher confidence in the long-term.

Among the hedge funds tracked by Insider Monkey, 45 funds were bullish on Yum! Brands, Inc. at the conclusion of the first quarter of 2022, up from 36 funds in the prior quarter. Ken Griffin’s Citadel Investment Group is the largest position holder in the company, with 2.2 million shares worth $270 million.

1. Starbucks Corporation (NASDAQ:SBUX)

Number of Hedge Fund Holders: 58

YTD Share Price Decline as of July 22: 28.36%

Starbucks Corporation is an American multinational chain of coffeehouses. Despite the shares declining over 28% year to date, Starbucks Corporation remains an attractive stock to buy on the dip. On June 29, the company declared a quarterly dividend of $0.49 per share, in line with previous. The dividend is payable on August 26, for shareholders of record on August 12.

On July 21, Citi analyst Jon Tower raised the price target on Starbucks Corporation to $84 from $76 and kept a Neutral rating on the shares. However, the management “will tease the idea” that labor investment may be modest, and Starbucks “may meaningfully accelerate” U.S. unit growth in the next 12-24 months, added the analyst, who expects U.S. comp upside versus the Street this quarter.

According to Insider Monkey’s data, 58 hedge funds were bullish on Starbucks Corporation at the end of March, up from 53 funds in the last quarter. Terry Smith’s Fundsmith LLP is the leading stakeholder of the company, with 8.2 million shares worth $749 million.

Here is what Polen Focus Growth Fund has to say about Starbucks Corporation in its Q1 2022 investor letter:

“We trimmed our positions in most of these companies in 1Q 2022 and sold our stake in Starbucks after a 12+ year holding period. In our view, Starbucks continues to be in a unique position to serve its customers who value the quality of its products and the convenient way they can be purchased. At the same time, Starbucks’ business is maturing in western markets, and its employee and store-related costs are growing, which should lead to slower earnings growth than we would prefer and further P/E multiple compression. We believe we have better opportunities as we continue to assess the impact of these issues for Starbucks.”

You can also take a look at 10 Most Shorted Stocks to Watch in July and 10 Dividend Stocks of All Time.

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