Investing.com -- As the US restaurant sector navigates a challenging landscape, Bernstein has identified several standout stocks positioned to outperform in 2026 despite ongoing economic headwinds.
After a difficult 2025 marked by weakened consumer confidence, government shutdowns, and tighter immigration policies affecting the Hispanic population, analysts expect a gradual traffic recovery rather than a sudden rebound. However, with restaurant valuations hitting 10-year lows, there’s significant upside potential if consumer data improves. The upcoming Tax Bill and US-hosted Soccer World Cup could stimulate demand starting in spring 2026.
Bernstein highlights these top restaurant stocks:
Chipotle Mexican Grill (CMG): Trading at 32x earnings, well below its 5-year median of 48x, Chipotle appears undervalued. Analysts believe the market is overly negative on margin outlook while underappreciating potential sales growth from new initiatives targeting the snacking occasion, such as their new protein cup. Despite sector-wide pressure, Chipotle’s focus on high-income consumers positions it well in what analysts describe as a "K-shaped economy."
In a recent development, Chipotle Mexican Grill launched a new High Protein Menu across the U.S. and Canada. The company also received positive sentiment from several analyst firms, including TD Cowen and Bernstein, which raised their price targets.
Wingstop (WING): The company’s valuation has significantly compressed and is tightly linked to same-store sales growth, which is approaching all-time lows. Bernstein expects the combined effect of Wingstop’s Smart Kitchen implementation, loyalty program enhancements, and new advertising campaign to help same-store sales return to positive territory, potentially triggering a valuation inflection.
Wingstop recently announced the opening of its 3,000th global restaurant, marking a significant milestone in its expansion. Additionally, Freedom Capital Markets initiated coverage on the company with a Buy rating.
Darden Restaurants (DRI): Currently trading at what Bernstein considers a conservative 17x forward P/E ratio, Darden presents an attractive entry point. Analysts view the company as a long-term compounder with prudent guidance and reliable management execution, making the current valuation particularly appealing amid sector-wide challenges.
Darden Restaurants reported strong fiscal second-quarter results, with sales exceeding analyst projections, driven by same-store sales growth at both Olive Garden and LongHorn Steakhouse that beat consensus estimates.
Key sector debates for 2026 include the continuation of divergent economic outcomes benefiting restaurants serving higher-income consumers, accelerating GLP-1 adoption as pill forms become available, ongoing pressure on Hispanic consumers, market share shifts between restaurant categories, and valuation rebounds as consumer data improves.
Bernstein notes that restaurant P/E ratios for high-growth concepts have dropped over 40%, suggesting reduced investor risk appetite for companies with long-term growth horizons, though they view the sector as cyclically rather than structurally challenged.
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