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What you need to know
- Yum! Brands, Darden, and Shake Shack are Oppenheimer analysts' top investment picks for the restaurant industry in 2025.
- The analysts were attracted by their same-store forecasts and marketing initiatives, as well as in certain cases, the sales projections.
- Oppenheimer added that prices will be lowered on the menus.
According to Oppenheimer analyst, Olive Garden, KFC and Shake Shack are likely to be particularly attractive investments by 2025.
Yum! The company behind Olive Garden, LongHorn and LongHorn steakhouse is Darden Restaurants. Shake Shack was also nabbed. “top pick” Restaurants are ranked according to their outlook for the year 2025, as outlined by an investment company.
Oppenheimer’s analysts stated in a report released on Monday that three companies stood out for promising sales projections at the same stores and, in certain cases, new management and marketing efforts. It upgraded the ratings of all three companies. “outperform.”
Analysts see growth at Yum! Analysts see growth at Yum!
Analysts at Oppenheimer named Yum! Oppenheimer’s analysts named Yum! Brands as one of their top choices, stating that while the restaurant giant experienced declining sales at its same-stores in 2024 but is expected to rebound in 2025. Oppenheimer analysts expect growth in KFC’s international portfolio, as well as Taco Bell where they anticipate market share gains. Yum! Stock is an excellent investment. Brands at the moment is prudent given investor sentiment towards Yum! “subdued,” Analysts said.
Oppenheimer also said that Darden will see an improvement in same-store revenues as the factors which have held back fine dining begin to subside. Analysts said that Olive Garden’s future is particularly bright, noting the fact that it has begun to deliver food and improve its marketing.
Oppenheimer was impressed by the new leadership of Shake Shack, which has praised the efforts made by the Chief Executive Officer Rob Lynch to improve the efficiency and marketing approach for the Burger Business.
Healthy Year for the Restaurant Sector
Analysts said that the broader restaurant sector is set for a better 2025, after foot traffic declined throughout much of 2024. They noted, however, that recent orders had increased. The group believes that a decline in price increases on menus will help maintain this momentum. Oppenheimer says that the increases in ingredients, labor and supply are settling down. The average increase is expected to be between 2% and 3% at the end of 2025.
“[Staff] turnover rates are hitting record lows,” The note read: “This is allowing restaurants to revert to normalized menu-price increases and enable ‘value’ offerings without disabling margins.”
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