Best Restaurant Stocks On The Platter For 2015

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Mar 30, 2015
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The fast food and casual dining sector is one of the most competitive sectors in the market today, because there are lots of players here fighting for a reasonable market share. Investors who are particular about investing in the restaurant sector are sure to have a tough time in choosing the best among the various stocks as there are quite a lot of good and sensible options here. You have to choose the right stock that matches your requirements. If you are willing to take a few risks for greater returns, some of the new-age restaurant stocks that are discussed below will be the right options for you.

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One of the famous restaurant stocks to invest in, if you are ready for some risks, is Shake Shack (SHAK, Financial). The company has grown immensely ever since it launched the IPO during January 2015. During its IPO, share prices of the stock were expected to be in the range of $16 per share. Anticipation about share prices kept on soaring among investors and today, the share price is in the range of $48 per share – a mammoth increase indeed! Shake Shack has been one of the go-to names when it comes to casual dining during the last few years, because the store specialises in lip-smacking frozen custards, natural burgers that are devoid of all kinds of artificial ingredients, healthy shakes, hot-dogs, fries etc.

The best part about the restaurant is that, the management has massive plans for the future. Currently there are 63 stores overall of Shake Shack across the globe out of which the domestic and international stores are almost at 50% each. The restaurant has plans to increase its presence in the US to a great extent in the coming years, which is evident from its announcement that a minimum of 450 restaurants are due to get launched in the US market. The impending massive growth is all set to make investors happy in more ways than one. The restaurant, which started off with a modest $19million sales value in 2010, has reported sales worth a whopping $118.5million during 2014. Restaurant sales and income from licenses too grew by 51% in 2014 from the previous year. The stock movement trend for the last couple of months of Shake Shack can be seen below:

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Healthy food is this stock’s core competency

Zoe’s Kitchen (ZOES, Financial) is the other promising restaurant stock for investors who are looking for good growth and are ready to take up a reasonable amount of risk for the same. One of the main factors for this company’s success is the fact that that it provides fresh foods to customers. There are no artificial substances, additives or preservatives in these dishes and the kitchen staff prepare fresh food on a daily basis to be served to customers. If you are interested to taste some authentic Mediterranean cuisine, Zoe’s Kitchen is the place to go. You must try out grilled chicken based dishes when you visit one of their stores next.

Now let us try to understand why this becomes a good stock for investors. During the last quarter, Zoe reported a 39.5% increase in its sales values and a 7.8% increase in comparable stores sales figures. During 2009, Zoe’s revenues were a meagre $20.8 million; however in just half a decade, this figure grew to $171.7 million last year. These are some phenomenal numbers for investors who are looking for growth prospects. The number of restaurants too has gone up from a humble 31 joints during 2009 to 132 joints in 2014. This year, the management’s plans are looking quite aggressive as around 33 new restaurants would be opened during this time. You might want to hold your breath when you read this piece of news – in the near future, management of Zoe’s Kitchen is planning to open a staggering 1600 new restaurants in the US market alone. Is this not enough reason for you to invest in this company right away? The trend of share price movements of the stock for the last few months is seen below:

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Conclusion

Restaurant stocks are one of the fastest growing stocks today and are best for investors who are looking for fast-track growth prospects. At the same time, if you want to invest in this industry, you must also remember that there are lots of risks associated here due to the sheer amount of new brands coming up in the casual and fast dining categories. The demand for food is undying; however if there are too many players are involved, you must exercise prudence and choose the ones that have the capacity to ward off all sorts of competition in the future and emerge successful.