Over the last three months, restaurant stocks have come under pressure due to consumer pushback against higher prices. Consumers are pulling back and opting for value, leading to declines in same-store sales. Still, this is a bifurcated industry where some players are thriving in this challenging environment.

To be sure, the last quarter was difficult for restaurants with high-end pricing. Starbucks (NASDAQ:SBUX) was a classic example, falling over 10% after reporting disappointing earnings on April 30. However, on the other end, players with value menus are capitalizing on the consumer weakness to attract more customers. Additionally, chains that have healthier menus focusing on quality ingredients are thriving.

As we move on, restaurant stocks with value or health-conscious menus are insulated against consumer weakness. So far, these restaurant stocks are winning, as demonstrated by their impressive same-store sales growth. Although they have suffered in the industry-wide selloff, the market will soon recognize their quality growth, triggering a rebound.

Domino’s Pizza (DPZ)

Although Domino’s Pizza (NYSE:DPZ) fell 10% after Q2 2024 earnings, it’s time to buy the stock. First, let’s get the bad news out of the way. Due to issues at one of its master franchisees, Domino’s Pizza Enterprises (OTCMKTS: DMZPY), management disclosed that international openings would fall to 175 to 275 stores from a target of over 925 net stores in 2024. However, management reiterated it expected 175 or more net new U.S. store openings annually between 2024 and 2028.

Still, the disappointing international openings guidance shouldn’t negate what was an excellent quarter. Overall, the company delivered solid same-store sales growth of 4.8% in the U.S. and 2.1% in international stores. As a result, total global retail sales surged 7.2% year-over-year, an improvement from the 5.8% growth recorded in Q2 2023.

Domino’s continues to lean on its Hungry for MORE plan to deliver the most delicious food, operational excellence, renowned value and enhanced by best-in-class franchisees. For instance, building on the most delicious food pillar, it launched its New York-style pizza in Q2. At the same time, its reward program is offering value attracting new members.

Under this plan, Domino’s Pizza will resonate with customers and drive long-term shareholder value. Moreover, with management forecasting over 7% annual retail sales growth between 2024 and 2028, this is a growth story.

Chipotle Mexican Grill (CMG)

In recent weeks, Chipotle Mexican Grill (NYSE:CMG) has been under the spotlight, facing claims that it was rationing portions. As a result, investors feared a decline in revenues, triggering an over 20% selloff. However, these fears were laid to rest in the latest quarterly report.

On July 24, the company delivered impressive Q2 2024 results that highlighted strength across the board. Comparable restaurant sales rose by 11.1% driving an 18.2% YOY revenue increase to $3 billion. A 2.4% increase in average check and an 8.7% growth in transactions drove comparable restaurant sales. Additionally, the restaurant opened 52 new restaurants, leading to higher revenue growth.

Turning to profitability, Chipotle maintained its leading margins among restaurant stocks. Due to the benefit of sales leverage, the restaurant-level operating margin increased from 27.5% in Q2 2023 to 28.9%. Meanwhile, adjusted EPS increased from $0.25 to $0.34, an increase of 36%.

This earnings report shows that customers cannot get enough of Chipotle’s staples, such as a burrito bowl, steak quesadilla and tacos. Notably, the company plans to grow to more than 7,000 restaurants from 3,500 as of June 30. These new openings, plus transaction growth and increased ticket sizes, will drive long-term growth.

CAVA (CAVA)

Recent IPO CAVA (NYSE:CAVA) is one of the restaurant stocks with the most potential going forward. Since its listing in June 2023, it’s up over 350%. Still, due to its ambitious growth plans, it could be a multi-bagger from current levels.

Indeed, CAVA has been opening new restaurants at a rapid pace. In its S-1 filing last year, it disclosed it had 263 restaurants. Since then, this number has grown to 323 restaurants, as revealed in Q1 2024 earnings. Moreover, management plans to triple restaurants with a target of over 1,000 CAVA restaurants in the United States by 2032.

Through its authentic Mediterranean culinary experience, CAVA can achieve this growth vision. So far, financial results have impressed. For the full year 2023, it achieved 59.8% revenue growth fueled by a 17.9% growth in same-restaurant sales growth. The momentum continued in Q1 2024 as the restaurant stock reported revenue growth of 30%.

These growth numbers mean that CAVA is one of the fastest-growing chains. It’s rare to get such growth at a bargain, but there is an opportunity as the stock is currently in a correction. At 8 times 2025 revenue estimates, CAVA stock is one of the top restaurant stocks to buy.

On the date of publication, Charles Munyi 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.

On the date of publication, the responsible editor did not have (either directly or
indirectly) any positions in the securities mentioned in this article.