According to estimates from the National Restaurant Association, restaurant sales in the United States reached a record $1.1 trillion in 2024. This was the first time in history the industry surpassed $1 trillion in sales.
The association has also reported that the industry workforce was projected to grow by 200,000 jobs in 2024, for total industry employment just shy of 16 million workers by the end of the year. Restaurants are dealing with growing competition and higher operating costs, particularly elevated labor costs.
It's also still a challenging time for many restaurant consumers, who are spending cautiously in a macro environment that is still showing signs of inflation. All restaurants are also facing problems that include labor shortages, cost inflation, and an uncertain economic environment that could sap demand.
Against this volatile backdrop, not all restaurants will fare equally. Businesses that present a solid value proposition to consumers and maintain a steady moat should demonstrate the most impressive financial resilience moving forward over the next few years.
Best restaurant stocks in 2025
Best restaurant stocks in 2025
Even with the challenges facing the restaurant industry, investing in the best restaurant stocks can prove to be a wise decision. The industry will likely be in turmoil for a while, but these top three restaurant stocks should deliver solid returns for investors over the long run.
1. McDonald’s
1. McDonald’s
Although fast-food giant McDonald’s (MCD 1.3%) has witnessed moderate shifts in sales and profits in recent quarters, it continues to invest in new restaurants as well as initiatives to attract and retain consumer spending. McDonald’s has also been investing in digital sales and delivery.
The company launched a revamped mobile app in 2017 that allowed customers to order and pay from a smartphone, and its McDelivery service hit its stride in 2019 when partnering with DoorDash (DASH 2.5%) brought delivery to more than 10,000 locations.
The investments McDonald’s made in its digital channels and initiatives like its loyalty program in recent years are paying off. In late 2024, management reported that systemwide sales to loyalty members across approximately 50 loyalty markets had topped $28 billion for the trailing 12-month period and almost $8 billion for the third quarter alone.
In the first nine months of 2024, McDonald's reported revenue of $19.5 billion, with net income totaling $6.2 billion. The top-line figure was up 2% from the comparable period in 2023, even as profits declined by a slight figure of 3%.
McDonald's has been a faithful dividend payer through the years. McDonald's has raised its dividend for 48 consecutive years since paying its first dividend in 1976.
The stock yields about 2.5% based on current share prices, while paying an annual dividend in the ballpark of $7 per share. Over the last decade, McDonald's has increased its dividend by more than 100%.
With a price-to-earnings ratio of roughly 25 based on the average analyst estimate in January 2025, it’s not too late to invest in this top-notch fast-food chain.
2. Domino’s
2. Domino’s Pizza
Domino’s Pizza (DPZ 1.93%) long ago perfected the art of getting hot food to people quickly. With an increasing number of restaurants using third-party delivery services to boost sales, Domino’s is facing more delivery competition than ever. The good news is that Domino’s has some key competitive advantages.
The company and its franchisees do most delivery in-house, and Domino’s charges franchisees a very small fee for digital orders. In contrast, a restaurant using a third-party service pays far higher fees, sometimes passing the cost on to consumers in the form of higher prices. For consumers, third-party delivery often comes with multiple layers of fees that can drastically raise the cost of a meal.
Domino’s certainly has a cost advantage over any restaurant using a third-party delivery service. However, it has embraced third-party apps in recent years to expand its delivery options and potential customer reach, announcing partnerships with companies including Uber Eats, DoorDash, and Postmates, which is owed by Uber (UBER 1.83%).
Ironically, the lion's share of Domino's financial growth does not come from selling pizzas. Instead, the vast majority of its overall revenue is derived from selling ingredients, equipment, and supplies to its franchisees. Domino's also makes money from royalty and franchise fees.
In the first nine months of 2024, Domino's reported profits of $415 million on revenue of $3.3 billion. Those figures represented respective increases of 15% and 6% compared to the year-ago period. The company also generated $376 million in free cash flow in the nine-month time frame.
Domino’s continues to look well-positioned to be the undisputed leader in the pizza industry. As the cherry on top, the company pays a consistent dividend, which yielded about 1.5% in January 2025. Its annual dividend is approximately $6 per share.
3. Chipotle
3. Chipotle Mexican Grill
Fast-casual favorite Chipotle Mexican Grill (CMG 0.52%) has pivoted hard toward digital sales in recent years. The results have been impressive.
The company first launched delivery through its mobile app in late 2018 by partnering with third-party delivery services. Chipotle has been busy adding Chipotlanes, the company's take on drive-thru, to many of its new locations.
Chipotlanes are for digital orders only, with customers placing an order through the app or website and picking it up at the window. This twist on the drive-thru adds another option for customers without introducing throughput-killing bottlenecks.
In the third quarter of 2024, total revenue increased 13% to $2.8 billion, and comparable restaurant sales increased 6%. Chipotle's overall operating margin was 16.9%, and restaurant level operating margin was 25.5%.
Chipotle also opened 86 new company-operated restaurants in the quarter, with 73 of those locations including a Chipotlane. Additionlly, it operated one international licensed restaurant in the three-month period. Earnings per share surged by 22% in the quarter.
Looking at the first nine months of 2024, Chipotle brought in total revenue of $8.5 billion, with net income of $1.2 billion. The figures were up 15% and 27%, respectively, from the same period in 2023.
Trading around 54 times earnings, Chipotle is not a cheap stock. But earnings can grow swiftly in the coming years as the company drives restaurant-level sales growth through its digital channels and builds hundreds of new restaurants annually. Chipotle is already a giant in the restaurant industry, but there’s still plenty of growth ahead.
Related investing topics
Should you buy?
Should you buy restaurant stocks?
Restaurant companies that are well-positioned to cope with economic shocks are generally the best restaurant stocks to add to your portfolio. Value-oriented restaurant chains are likely to perform well over the long term. McDonald’s, Domino’s, and Chipotle all fall into that category.
Some of the recent shifts in consumer spending behavior may last for the coming fiscal periods. Working from home will likely continue to be more common, and widely available restaurant delivery is a convenience that is here to stay. If you choose to add restaurant stocks to your portfolio, focus on companies that are more likely to benefit from the prevailing trends.
