12 Best Restaurant Stocks to Buy According to Hedge Funds

8. Shake Shack Inc. (NYSE:SHAK)

Number of Hedge Fund Holders: 43

Shake Shack Inc. (NYSE:SHAK) operates a roadside burger business. Along with excellent burgers, hot dogs, crispy chicken, frozen custard, crinkle-cut fries, shakes, beer, wine, and more, it offers a traditional American menu. A whole-muscle blend of all-natural, hormone- and antibiotic-free Angus beef is used to make the company’s burgers. The beef is ground fresh every day, grilled to order, and served on a potato bun that isn’t genetically modified. Its menu consists of a variety of traditional American foods and drinks. It is ranked eighth on our list of the Best Restaurant Stocks.

Shake Shack Inc. (NYSE:SHAK) announced a solid first quarter, with total revenue of $320.9 million and system-wide sales of $489.4 million, supported by the addition of 11 new Shacks to its global network. As a result of operational improvements and strict cost control, the company’s first-quarter restaurant-level profit margin increased by 120 basis points year over year to 20.7%, its highest since 2019. As it works toward its long-term objective of running 1,500 company-owned Shacks and aiming to cut operating and construction costs by 10% by 2025, strategic efforts are going well. The introduction of the Dubai Chocolate Pistachio Shake, which was well received by customers and swiftly sold out, revealed that innovation in the culinary arts is still the primary goal. The licensed business also grew, as evidenced by the launch of seven new Shacks under the licensing model and a 10.4% jump in revenues year over year.

BofA increased the firm’s price estimate from $89 to $97. The analyst informs investors that, similar to McDonald’s, Shake Shack Inc. (NYSE:SHAK)’s Q1 same-store sales increase of 0.2% was more in line with market expectations, even if it fell short of the consensus and the 2.5%–3.5% comp guidance that was issued in late February. Following the company’s Q2 guidance, the company reduced its Q2 same-store sales growth estimate to 1.5% after the report was released. It also reported that its FY25 EBITDA forecast was higher at $218.7 million, as opposed to $213.0 million and the previous guidance of $ 205-$215 million.