12 Best Restaurant Stocks to Buy According to Hedge Funds

4. Texas Roadhouse, Inc. (NASDAQ:TXRH)

Number of Hedge Fund Holders: 52

Texas Roadhouse, Inc. (NASDAQ:TXRH) is a restaurant business that specializes in casual dining. The company has designated Texas Roadhouse, Bubba’s 33, Jaggers, and retail ventures as separate operational segments since it operates its restaurant and franchise businesses based on concepts. Furthermore, it has designated Bubba’s 33 and Texas Roadhouse as reportable parts. The Texas Roadhouse segment, a full-service, casual dining restaurant concept with affordable prices that serves steaks, ribs, seafood, chicken, pork chops, pulled pork, vegetable plates, and a variety of hamburgers, salads, and sandwiches, is where the company generates the most revenue. It is ranked fourth on our list of the Best Restaurant Stocks.

Texas Roadhouse, Inc. (NASDAQ:TXRH) announced impressive first-quarter 2025 earnings, bringing in over $1.4 billion. The company attributed its success to a 3.5% rise in same-store sales and sustained positive traffic growth. Eight company-owned restaurants, including one Bubba’s 33 location, were opened as part of the company’s expansion, and it is still on schedule to build about 30 more this year. Operational efficiency is improving as digital changes are rolled out, with 65% of restaurants currently using a digital kitchen system and full installation planned by the end of the year. Furthermore, a new guest management system has been implemented in 70% of sites to improve floor management and wait time accuracy. The firm had $221 million in cash at the end of the quarter, earning $238 million in operational cash flow. This was slightly offset by $173 million in capital expenditures and other financial activities, which show continuous growth and infrastructure improvements.

Texas Roadhouse, Inc. (NASDAQ:TXRH)’s price target was increased by RBC Capital from $180 to $185. In a research note, the analyst informs investors that the company’s Q1 earnings were positive because traffic increased in March and into the first five weeks of Q2, which undoubtedly alleviated any macro-related concerns. However, RBC notes that it still anticipates margin pressure due to high commodity prices and inflation year over year.