In this article, we will discuss: 12 Best Restaurant Stocks to Buy According to Hedge Funds.
Restaurant stocks are businesses that own, run, and franchise full-service restaurants that sell prepared food and drinks at retail.
According to estimates from the National Restaurant Association, restaurant sales in the United States reached an all-time high of $1.1 trillion in 2024. The industry’s sales exceeded $1 trillion for the first time ever. According to the group, the industry’s workforce was projected to go up by 200,000 jobs in 2024, bringing its total employment to just under 16 million by the end of the year. Restaurants are facing increased competition as well as greater operating expenses, especially labor costs.
Michelle Korsmo, President & CEO of the National Restaurant Association, stated:
“With more than $1 trillion in sales expected this year, the state of the restaurant industry is strong thanks to the agility of its operators and employees,” “As our report shows, restaurants are finding ways to adapt to the challenges of increased food costs and supply chain disruption. Restaurants have responded well to customers’ desire to have more opportunities to enjoy restaurant meals, which continues to grow sales, create employment opportunities, and foster a strong sense of community.”
Nonetheless, as the macro economy continues to exhibit signs of inflation, many diners are having a tough time and are spending carefully. Furthermore, labor shortages, cost inflation, and an unstable economy that may reduce demand are issues that all restaurants are dealing with. Not every restaurant will do well in this volatile setting. However, the most remarkable financial resilience should be shown by companies that offer a strong value proposition to customers and keep a stable moat over the coming years.
As per the National Restaurant Association’s research report, the restaurant business in the United States is expected to increase further in 2025, with sales expected to exceed $1.5 trillion. Employment is predicted to jump by 200,000, bringing the total workforce to 15.9 million. Demand from customers is still strong; 90% of adults claim they like eating out because of the different tastes and experiences that restaurants provide. Value is a top priority, as 47% of operators want to launch new sales or promotions to draw clients.
However, many customers value experience more than price: 47% of limited-service diners and 64% of full-service diners place a higher value on dining experiences than on prices. On-premises traffic is a primary strategic priority, with 90% of fine dining and 87% of casual dining operators prioritizing it over off-premises sales. Despite their willingness to pay, many consumers say they would eat out more often if they had more money to spend. As operators strike a balance between innovation, price, and experience to foster loyalty and growth, these dynamics show cautious optimism.
KPMG revealed not only the challenges but also major trends that will impact the restaurant business this year, based on views from senior executives. The restaurant business expects to grow in 2025 due to the introduction of new products and the opening of more outlets. However, rising labor and food costs, as well as inflationary fears, pose serious problems, especially for franchisees. Operators are putting a high priority on digital enablement to improve customer conversion, maximize operations, and modify menus to accommodate changing customer preferences to remain competitive. Industry dynamics are still being shaped by the growing dependence on third-party ordering and delivery platforms. Lastly, it is essential to keep up a positive workplace culture to attract and keep talent.
With that said, here are the 12 Best Restaurant Stocks to Buy According to Hedge Funds.
A bustling restaurant kitchen, where chefs prepare their signature dishes with fresh ingredients.
Our Methodology
For this article, we sifted through the online rankings to form an initial list of the 20 Restaurant Stocks. From the resultant dataset, we chose 12 stocks with the highest number of hedge fund investors, using Insider Monkey’s database of 1009 hedge funds in Q4 2024 to gauge hedge fund sentiment for stocks.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points. (see more details here).
12. Sweetgreen, Inc. (NYSE:SG)
Number of Hedge Fund Holders: 33
Sweetgreen, Inc. (NYSE:SG) is a mission-driven, next-generation restaurant and lifestyle company that provides nutritious meals on a big scale. Its ambitious objective is to become as accessible as conventional fast food while maintaining the quality and transparency that modern consumers want. The firm focuses on local, organic, and regenerative sourcing while utilizing fresh produce and ingredients to provide plant-forward, seasonal, and environmentally responsible meals. The ordering process for customers will be simplified, and the cleanliness of the robotic “infinite kitchen” model will only aid in the expansion of the company. It is among the Best Restaurant Stocks.
Sweetgreen, Inc. (NYSE:SG) had remarkable financial success in 2024, with revenues rising by more than 16% to $676.8 million and restaurant-level profitability rising by more than 200 basis points to 19.6%. For its first full year of success, the company’s adjusted EBITDA rose by $21.5 million from the year before to $18.7 million. At the end of 2024, it had 246 locations, including 12 Infinite Kitchens, after growing its footprint by adding 25 new restaurants. The 2024 class of new restaurants did quite well, with one-year sales of $2.8 million.
Sweetgreen, Inc. (NYSE:SG) recorded $160.9 million in revenue for the fourth quarter of 2024, up 5.1% from the previous year, owing to its unique menu, technology developments, and overall visitor experience, making it one of the Best Restaurant Stocks. The company had a weaker quarter, with EBITDA estimates missing by a large margin, yet this result was consistent with analysts’ expectations.
11. Wingstop Inc. (NASDAQ:WING)
Number of Hedge Fund Holders: 36
Wingstop Inc. (NASDAQ:WING) is a restaurant operator that was established in 1994 in Garland, Texas, and specializes in bone-in and boneless chicken wings, chicken tenders, fries, and, more recently, chicken sandwiches. Since its founding, the company’s global footprint has expanded rapidly, with more than 2,560 outlets expected by the end of 2024. The firm has a 98% franchised business model, meaning that the majority of its revenue comes from advertising fees and franchise royalties. The remaining portion comes from a limited number of company-owned locations. It is one of the Best Restaurant Stocks.
Wingstop Inc. (NASDAQ:WING) had a successful first quarter of 2025, with both operational and record development. The company established a record 126 new units, showing its aggressive expansion strategy and rising brand visibility. As a result of its successful digital transformation efforts, digital revenues jumped to 72% of overall sales. In terms of finances, its adjusted EBITDA grew by 18.4% year over year to $59.5 million. With the opening of a new market in Kuwait, the company’s international expansion gained momentum and set weekly sales records worldwide. Furthermore, brand health measurements and guest ratings have hit all-time highs, showing excellent client satisfaction and loyalty.
Guggenheim maintained its Buy rating on Wingstop Inc. (NASDAQ:WING) shares and increased the price objective from $280 to $325. The analyst says that although the firm’s management has guided to a significant improvement in same-store sales in the second half from what is expected to be a soft Q2, “the bulk of our upward revisions” are driven by increased unit growth assumptions. The analyst is raising the firm’s 2025 and 2026E EPS forecasts to $3.88 and $5.00 from $3.85 and $4.80, respectively.
10. Darden Restaurants, Inc. (NYSE:DRI)
Number of Hedge Fund Holders: 36
Darden Restaurants, Inc. (NYSE:DRI) is the biggest full-service restaurant operator in the United States, with a combined revenue of $11.4 billion in fiscal 2024. Eleven restaurant brands are owned by the company: Seasons 52, Eddie V’s, Bahama Breeze, The Capital Burger, Ruth’s Chris, Yard House, Cheddar’s Scratch Kitchen, Olive Garden, LongHorn Steakhouse, and most recently, Chuy’s. Its company-owned restaurants account for almost all of its revenue, with a tiny network of franchised restaurants and sales of consumer packaged goods through the conventional supermarket channel making up a small portion. The company ran 2,031 restaurants in the United States by the conclusion of its fiscal year 2024. The stock surged by more than 5% YTD, making it one of the Best Restaurant Stocks.
Despite the negative effects of bad weather, Darden Restaurants, Inc. (NYSE:DRI) had a strong quarter (Q3 of 2025), with all four businesses reporting positive growth in same-restaurant sales. Olive Garden’s effective relaunch of menu staples improved base traffic, increased sales trends, and generated high social media engagement, all of which contributed to its impressive performance. The firm’s adjusted diluted net earnings per share jumped 6.9%, while total sales climbed 6% year over year to $3.2 billion. LongHorn Steakhouse made a significant contribution, increasing overall sales by 5.1% with the help of 14 net new locations and a 2.6% rise in same-restaurant sales.
Guggenheim maintained its Buy recommendation on the shares and increased the firm’s price target from $205 to $220. The analyst tells investors that the company considers Darden Restaurants, Inc. (NYSE:DRI) to be “one of the best operators in the restaurant sector” with increasing sales momentum. The company raised its FY26 EPS prediction to $10.80 from $10.70, mostly due to the addition of 20c for a 53rd week, offset by roughly 10c from a higher tax rate.
