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.
9. Dutch Bros Inc. (NYSE:BROS)
Number of Hedge Fund Holders: 41
Dutch Bros Inc. (NYSE:BROS) is a drive-thru coffee shop operator and franchisor that specializes in handcrafted beverages. The company’s artisan beverage-focused selection includes tea, lemonade, smoothies, cold brew coffee products, hot and cold espresso-based beverages, and proprietary energy drinks. The company has two reportable operating segments: company-operated shops and franchising. Its primary source of revenue is from Company-operated shops.
In the first quarter, Dutch Bros Inc. (NYSE:BROS) achieved solid results, with total revenue jumping 29% year over year due to strong same-store sales, transaction growth, and ongoing shop expansion. While maintaining strong levels of effectiveness, the company established 30 new stores throughout the quarter, intending to accelerate growth in the second half of the year. The business launched its 1,000th site in Orlando, Florida, marking a key milestone as it moves closer to its strategic target of 2,029 stores by 2029, which is backed by strong market planning and real estate activities. The Dutch Rewards program accounted for 72% of system transactions, a 5-point increase from the previous year, showing rising brand loyalty and new levels of customer engagement. Financially, adjusted EBITDA grew 20% year on year, displaying great cost control and operational efficiency.
Barclays maintained its Overweight rating on BROS and increased its price objective from $76 to $82. In a research note, the analyst informs investors that the company’s traffic momentum is expected to continue into Q2 and that its Q1 offered margin and EBITDA upside. The company purchases Dutch Bros Inc. (NYSE:BROS) stock on any weakness.
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.
7. Domino’s Pizza, Inc. (NASDAQ:DPZ)
Number of Hedge Fund Holders: 46
Domino’s Pizza, Inc. (NASDAQ:DPZ) is a franchise and restaurant operator with around 21,400 outlets throughout more than 90 international markets as of the end of 2024. In addition to royalties and marketing contributions from franchised stores, the company’s network of 25 domestic (and five Canadian) dough manufacturing and supply chain facilities, which centralize purchasing, preparation, and last-mile delivery for its US and Canadian restaurants, and sales of pizza, wings, salads, sandwiches, and desserts at company-owned stores are the main sources of revenue. The firm holds a dominant position in the global pizza industry, with total sales of around $19.2 billion in 2024. It is among the Best Restaurant Stocks.
Domino’s Pizza, Inc. (NASDAQ:DPZ) is well-positioned to withstand a harsh business climate due to its 85% digital sales mix, effective incentive program, and quickly expanding carryout business. Morningstar analysts believe the company’s long-term focus on protecting franchisee profits, strengthening its expanding carryout business, fortifying its tech infrastructure, and increasing store density at the market level is prudent, despite forecasting a difficult couple of quarters with signs of consumer trade-down and declining industrywide traffic.
Analyst Andrew Strelzik of BMO Capital maintained his Outperform rating on Domino’s Pizza, Inc. (NASDAQ:DPZ) shares and increased his price objective from $515 to $540. In a research note, the analyst informs investors that the company’s Q1 earnings are above expectations because of a stronger international comp, a gain on investment, lower G&A, and marginally higher supply chain profitability. The company sees multiple expansion potential as the business continues to be a compelling U.S. comp re-acceleration story with obvious sales drivers, BMO stated.
6. CAVA Group, Inc. (NYSE:CAVA)
Number of Hedge Fund Holders: 47
CAVA Group, Inc. (NYSE:CAVA) owns and operates a restaurant business. It is the brand that defines the Mediterranean fast-casual restaurant genre, combining healthy cuisine with strong, satisfying flavors on a large scale. The company produces its dips, spreads, and dressings at one location and sells them in supermarkets. CAVA and Zoes Kitchen are the two reportable segments that run the business. The CAVA segment accounts for the majority of the company’s revenue.
Important growth factors include menu additions like steak that have effectively attracted more customers, and an improved rewards program meant to promote connection and return business. The low cost of CAVA Group, Inc. (NYSE:CAVA) remains a major advantage in the face of broader economic restraints, attracting cost-conscious consumers, which makes it one of the Best Restaurant Stocks.
In Q4 of 2024, a remarkable 28% YoY revenue rise to $225.1 million and the 21.2% same-restaurant sales for the firm show CAVA Group, Inc. (NYSE:CAVA)’s strong momentum. The EPS of $0.05 fell short of the $0.07 expert average, but it was still stronger than the year before. The company plans to open 62-66 more locations in 2025 and is confirming its commitment to expanding its fast-casual Mediterranean style by opening 15 more restaurants in Q4.
5. Brinker International, Inc. (NYSE:EAT)
Number of Hedge Fund Holders: 51
Brinker International, Inc. (NYSE:EAT) runs casual dining establishments under the names Maggiano’s Little Italy (Maggiano’s) and Chili Grill and Bar (Chili’s). Chili’s belongs to the casual dining category of bars and grills. Signature dishes like slow-smoked baby back ribs, handmade burgers, fajitas, and bottomless chips and salsa served with tableside guacamole are among the Fresh Mex and Fresh Tex faves on its menu. The whole lunch and dinner menu of Maggiano’s, an Italian restaurant chain, includes chef-prepared dishes such as appetizers, chicken, seafood, veal and top steaks, and desserts. Chili’s category brings in the majority of revenue for the company.
Brinker International, Inc. (NYSE:EAT) had an outstanding quarter in Q3 of 2025, with a 21% rise in traffic and a remarkable 31.6% growth in same-restaurant sales, driven by Chili’s stellar performance. Through efforts to simplify its menu, increase sales, and improve operational efficiency, Chili’s also achieved an exceptional restaurant operating margin of 18.9%. The Big QP launch and other strategic marketing activities produced more impressions than previous ads and greatly increased brand awareness. Efficiency was also improved through operational changes, including better kitchen display systems. Sales of Margarita of the Month broke records as a result of the firm’s redesigned Margarita strategy, showing the success of its marketing campaigns.
In terms of finances, Brinker International, Inc. (NYSE:EAT) reported $1.425 billion in total revenues, a 28.2% rise in consolidated comparable sales, and adjusted diluted EPS that more than doubled from $1.24 to $2.66 in the previous year. By paying back about $125 million in funded debt, the company also strengthened its balance sheet and reduced its lease-adjusted leverage ratio to 1.9 times.
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.
3. McDonald’s Corporation (NYSE:MCD)
Number of Hedge Fund Holders: 67
McDonald’s Corporation (NYSE:MCD) is the world’s largest restaurant owner-operator, with over 43,000 locations and 115 markets and system sales of $131 billion in 2024. The firm invented the franchise model and expanded its global presence by forming alliances with master franchise partners and independent restaurant franchisees. The majority of the company’s revenue comes from company-run stores across its three primary segments: the United States, internationally operated markets, and worldwide developmental/licensed markets. Franchise royalties and leasing payments account for around 60% of the company’s total revenue. The stock grew by more than 6% YTD, making it one of the Best Restaurant Stocks.
McDonald’s Corporation (NYSE:MCD) released first-quarter earnings that showed a challenging operating environment for quick-service restaurants. Global comparable sales declined 1% due to Leap Day last year as well as lower guest counts in the United States, which saw a 3.6% decrease in comparable sales.
Nonetheless, McDonald’s Corporation (NYSE:MCD) strategy highlights its competitive advantages using the “MCD” framework, which includes core menu development, relevant marketing, and the four D’s: development, delivery, drive-thru, and digital. The company has recently been highlighting its value offerings in the face of a difficult environment for consumer spending by using its scale-driven cost advantage.
Andrew Strelzik, an analyst at BMO Capital, increased his price objective for McDonald’s Corporation (NYSE:MCD) from $340 to $345 while maintaining an Outperform rating for the company’s stock. In a research note, the analyst informs investors that the company’s Q1 results were difficult as anticipated since favorable G&A and tax rates counterbalanced weaker comps and margin pressure. According to the company, the management also observed that middle-class consumers were feeling more pressured by consumers, but that anti-American attitude had no effect.
2. Chipotle Mexican Grill, Inc. (NYSE:CMG)
Number of Hedge Fund Holders: 83
Chipotle Mexican Grill, Inc. (NYSE:CMG) is the largest fast-casual restaurant chain in the United States, with a projected systemwide sales of $11.3 billion by 2024. The firm has 3,726 locations across the US by the end of 2024, with a smaller presence in Canada, the UK, France, and Germany. The restaurant offers tacos, quesadillas, burritos, burrito bowls, and beverages. Delivery fees and restaurant sales provide all of the company’s income. It is among the Best Restaurant Stocks.
Chipotle Mexican Grill, Inc. (NYSE:CMG)’s recent quarter saw strong growth, with sales rising more than 6% year over year to $2.9 billion, even if comparable sales slightly decreased by 0.4%. Digital sales continued to play an important role, accounting for 35.4% of total revenue and emphasizing the company’s digital strategy. The quarter saw the debut of 57 new restaurants, including 48 Chipotle lanes that facilitate quick digital order pickup, showing the continued strength of expansion efforts. The introduction of Chipotle Honey Chicken proved to be the company’s most successful limited-time offer to date.
In terms of international expansion, Chipotle Mexican Grill, Inc. (NYSE:CMG) has opened five locations in the Middle East and formed a new development partnership in Mexico. Fortune has named the company one of the most admired in the world, praising its outstanding benefits package, work environment, and dedication to professional development.
1. Starbucks Corporation (NASDAQ:SBUX)
Number of Hedge Fund Holders: 84
Starbucks Corporation (NASDAQ:SBUX) is one of the most well-known restaurant brands in the world. As of the end of fiscal 2024, it had over 40,000 locations in more than 80 countries. The company is divided into three business segments: channel development (grocery and ready-to-drink beverages), international markets, and North America. Sales of equipment and products to license partners, ready-to-drink beverages, packaged coffee, single-serve items, and company-operated outlets are the main sources of income for the coffee business. The stock jumped more than 6% YTD, making it the Best Restaurant Stock.
In line with the “Back to Starbucks” concept of the company’s new CEO, Brian Niccol, Starbucks Corporation (NASDAQ:SBUX) business strategy will probably undergo a significant adjustment. The company continues to operate in a global category of one, with $36 billion in revenue in 2024, surpassing its nearest global competitor, Inspire Brands’ Dunkin’ Donuts, by a factor of three globally and a factor of two in its home market of the United States.
In the recent quarter, Starbucks Corporation (NASDAQ:SBUX) has shown excellent operational and customer-focused momentum in North America. Partner engagement is increasing, and employee turnover is falling to less than 50%, both of which improve the consumer experience. The firm has resumed positive comparative sales and transaction growth in Canada, indicating a turnaround and room for expansion. Algorithm-driven technology and labor deployment tactics were used in a successful pilot project that improved service speed and connection, reducing in-cafe wait times by two minutes and boosting transactions. In addition to stabilizing traffic from non-Starbucks Rewards members and a decline in consumer complaints regarding wait times, brand sentiment and market share are increasing. Eight of the top ten worldwide markets reported flat or positive comparable sales, with the UK, Middle East, and Japan topping the improvements, showing that the global recovery is also underway.
Overall, SBUX ranks first among the 12 Best Restaurant Stocks to Buy According to Hedge Funds. While we acknowledge the potential of restaurant companies, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than SBUX but that trades at less than 5 times its earnings, check out our report about this cheapest AI stock.
READ NEXT: 20 Best AI Stock To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.
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