It’s no secret that there are not many restaurant stocks to buy currently available. Consumers are reigning in their spending and reducing the amount they spend. It took a while for the U.S. Federal Reserve to catch up to the trends. However, interest rate increases and ongoing inflationary problems have finally started to bring an end to excess consumer discretionary spending.
Even the world’s largest restaurant chain, McDonalds (NYSE:MCD), is feeling the squeeze. Starting later this month, it plans on offering a $5 meal deal to bring back customers. But, as the promotion is only a month long, it remains to be seen if that will change the tide of its currently mixed financial results.
This all leaves investors wondering what the best restaurant stocks to buy right now are. There certainly are good buys out there, but it will depend greatly on how each restaurant company will navigate the near future while also planning for the long-term. Taking that into account, here are three of the best restaurant stocks to buy in June 2024.
Sweetgreen (SG)
Sweetgreen (NYSE:SG) is a fast casual salad restaurant chain founded in the Washington, D.C. area in 2007. It went public in November 2021, right around the time the stock market as a whole took a major dip. So it’s not surprising that in the first six months of being publicly traded it lost almost 83% of its value.
But the company is up a staggering 205% year-to-date (YTD), thanks in part to it beating all major expectations for its first quarter results. Sweetgreen opened six new restaurants during the first quarter. And, same-store sales increased 5%, 2% higher than management expected. Revenue totaled $158 million, which was better than management’s expectation of $154 million at best.
Sweetgreen is growing in popularity and plans to open up to 28 new stores in 2024, including nine automated restaurants. The company has also been very strategic as it opens new locations. It prefers to place them in areas with a large population, in high employment areas and in high income areas. As a relatively new name in the restaurant industry, there is plenty of opportunity for growth. SG appears to be one of the great restaurant stocks to buy right now.
Chipotle (CMG)
Chipotle (NYSE:CMG) seems to be weathering a recent controversy mostly unharmed. The CEO, Brian Niccol, has been lambasted online for his tone deaf response to customers’ complaints about portion sizes. However, CMG stock is up 41% on the year, and has remained relatively flat in the days since his video blunder went viral.
At the end of this month, Chipotle is set to complete a 50-for-1 stock split in order to make its shares more affordable. This split will be one of the largest ever for the New York Stock Exchange and presents great potential for investors who can buy in now. However, it also implies good future upside for investors who need to wait until it becomes more affordable. With this development, CMG might be at the top of the list of best restaurant stocks to buy this month.
Other recent positive financial developments for the company in Q1 include total revenue increasing by 14.1% to $2.7 billion. Additionally, comparable restaurant sales increased 7% and diluted earnings per share came in at $13.01, a 23.9% year-over-year increase.
Cava (CAVA)
Washington D.C. area restaurant founders must be on to something, because Cava (NYSE:CAVA) is another one of the top restaurant stocks to buy right now. Relatively new to the stock market having only gone public in June of 2023, Cava is up 137% since its IPO and 121% YTD.
What some would consider the Mediterranean version of Chipotle, Cava offers bowls, salads and pita wraps. It targets a similar demographic as Sweetgreen and Chipotle, so it’s no surprise it is also doing well in the current economy. While traffic has slowed, the company still recently reported great Q1 results. EPS came in at 12 cents, a dramatic improvement from a loss of $1.30 per share the year prior, and beating analysts’ estimates of 5 cents. Revenue was up 30.3% to $256.3 million and beat Wall Street forecasts of $246 million.
Perhaps most importantly, Cava now expects to open 50 to 54 net new restaurants in 2024, up from its February outlook of 48 to 52 net openings. With that increase has come the expectation that same-restaurant sales and adjusted EBITDA will also be higher than previously estimated. As consumers look for more affordable options, restaurants like Cava that offer filling meals for reasonable prices should see significant growth.
On the date of publication, Philippa Main did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
