It’s nice to splurge a little occasionally by visiting and dining at a cosy restaurant.
But did you know that such restaurants may turn out to be solid investments that you own for the long term?
The US stock market offers a good variety of choices for investors who are looking at growth stocks within the food and beverage sector.
These stocks could be delicious enough for you to take a bite into for your buy watchlist.
Yum! Brands (NYSE: YUM)
Yum! Brands is a fast food and restaurant chain that owns the famous brands KFC (Kentucky Fried Chicken), Taco Bell, and Pizza Hut.
For 2024, Yum reported a 7% year-on-year increase in revenue to US$7.5 billion.
Operating profit increased by 4% year on year to US$2.4 billion but net profit fell by 7% year on year, hit by a large income tax provision.
The restaurant chain generated a healthy positive free cash flow of S$1.4 billion for 2024, 8.6% higher year on year.
Yum also paid out a quarterly dividend of US$0.71, a step up from the previous year’s US$0.67.
Last year, Yum opened 4,535 new stores across more than 100 countries.
The company’s digital sales also rose around 15% year on year and made up half of total sales.
Byte by Yum! was also launched.
This is a comprehensive collection of proprietary software-as-a-service AI-driven products that can deliver integrated technologies for the company’s restaurants.
A new innovative concept – Saucy by KFC, was also tested.
This new concept offered customers the chance to customise their chicken tenders meal with 11 different sauces.
Chipotle Mexican Grill (NASDAQ: CMG)
Chipotle Mexican Grill, or CMG, offers Mexican food within its restaurants made with wholesome ingredients without artificial flavours, colours, or preservatives.
The company owns and operates 3,700 restaurants in the US, UK, Canada, France, Germany, Kuwait, and UAE as of 31 December 2024.
CMG reported a robust set of financial results for 2024.
Revenue increased by 14.6% year on year to US$11.3 billion while operating profit climbed 23% year on year to US$1.9 billion.
Net profit improved by nearly 25% year on year to US$1.5 billion.
The Mexican restaurant chain also generated a healthy positive free cash flow of US$1.5 billion, up 23.6% from the US$1.2 billion churned out in 2023.
In 2024, CMG opened a total of 304 restaurants, bringing its year-end restaurant count to 3,726.
For 2025, management expects full-year comparable restaurant sales growth to be in the low to mid-single-digit range.
The company also plans to open between 315 to 345 new stores, of which more than 80% will have a Chipotlane, a dedicated lane for online ordering and self-pickup.
Wingstop (NASDAQ: WING)
Wingstop operates and franchises more than 2,550 locations around the world.
The company serves classic and boneless chicken wings, tenders, and sandwiches in 12 bold and distinctive flavours.
Wingstop saw its revenue leap 36% year on year in 2024 to US$625.8 million.
Operating profit surged 47.1% year on year to US$165.6 million while net profit jumped 55% year on year to US$108.7 million.
The chicken specialist also generated a healthy free cash flow of US$105.7 million, 30.8% higher than a year ago.
During 2024, Wingstop opened 349 net new restaurants and also delivered its 21st consecutive year of same store sales growth of 19.9%.
A quarterly dividend of US$0.27 was declared and paid out, 22.7% higher than the US$0.22 paid out a year back.
For 2025, the company expects low to mid-single-digit domestic same-store sales growth.
Management intends to open 14% to 15% new stores this year, amounting to around 371 new stores at its mid-point.
Restaurant Brands International (NYSE: QSR)
Restaurant Brands International, or RBI, is a restaurant chain that owns four iconic brands – Burger King, Tim Hortons, Popeyes, and Firehouse Subs.
The company owns 32,125 restaurants in more than 125 markets at the end of 2024.
RBI reported a mixed set of earnings for 2024 with revenue rising 19.7% year on year to US$8.4 billion.
Operating profit climbed 18% year on year to US$2.4 billion but net profit dipped 14.2% year on year to US$1 billion.
The reason for this was because of a tax credit that the company received in 2023 that boosted its net profit.
Free cash flow generation remained strong at S$1.3 billion for 2024, up 8.2% over the previous year.
A quarterly dividend of US$0.62 was declared and paid.
From 2024 to 2028, RBI has set its sights on achieving 3%+ comparable store sales growth, 5%+ net restaurant growth, and 8%+ system-wide sales growth.
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Disclosure: Royston Yang does not own shares in any of the companies mentioned.
