From fast food to fine dining, restaurants play a vital societal role. Still, their demand can ebb and flow with the broader economy because consumers can always cook meals at home when times are tough, and the market seems to be baking in a downturn for the industry - over the past six months, it has pulled back by 2.8%. This drawdown is a far cry from the S&P 500’s 7.2% ascent.
Despite the lackluster result, a few diamonds in the rough can produce earnings growth no matter what, and we started StockStory to help you find them. Keeping that in mind, here are two resilient restaurant stocks pinned to our Google Maps and one we’re passing on.
One Restaurant Stock to Sell:
Wendy's (WEN)
Market Cap: $1.29 billion
Founded by Dave Thomas in 1969, Wendy’s (NASDAQ: WEN) is a renowned fast-food chain known for its fresh, never-frozen beef burgers, flavorful menu options, and commitment to quality.
Why Is WEN Risky?
- Weak same-store sales trends over the past two years suggest there may be few opportunities in its core markets to open new restaurants
- Demand will likely fall over the next 12 months as Wall Street expects flat revenue
- 7× net-debt-to-EBITDA ratio makes lenders less willing to extend additional capital, potentially necessitating dilutive equity offerings
At $7.54 per share, Wendy's trades at 13.2x forward P/E. To fully understand why you should be careful with WEN, check out our full research report (it’s free).
Two Restaurant Stocks to Watch:
Wingstop (WING)
Market Cap: $4.19 billion
The passion project of two chicken wing aficionados in Texas, Wingstop (NASDAQ: WING) is a popular fast-food chain known for its flavorful and crispy chicken wings offered in a variety of sauces and seasonings.
Why Should You Buy WING?
- Same-store sales growth over the past two years shows it’s successfully drawing diners into its restaurants
- Disciplined cost controls and effective management resulted in a strong two-year operating margin of 25.9%, and it turbocharged its profits by achieving some fixed cost leverage
- WING is a free cash flow machine with the flexibility to invest in growth initiatives or return capital to shareholders, and its growing cash flow gives it even more resources to deploy
Wingstop is trading at $163.72 per share, or 33.6x forward P/E. Is now a good time to buy? See for yourself in our in-depth research report, it’s free.
Brinker International (EAT)
Market Cap: $6.81 billion
Founded by Norman Brinker in Dallas, Brinker International (NYSE: EAT) is a casual restaurant chain that operates the Chili’s, Maggiano’s Little Italy, and It’s Just Wings banners.
Why Could EAT Be a Winner?
- Same-store sales growth averaged 15.5% over the past two years, showing it’s bringing new and repeat diners into its restaurants
- Economies of scale give it some operating leverage when demand rises
- Stellar returns on capital showcase management’s ability to surface highly profitable business ventures, and its rising returns show it’s making even more lucrative bets
Brinker International’s stock price of $180.73 implies a valuation ratio of 14.8x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free.
Stocks We Like Even More
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Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today.
