As the Q2 earnings season wraps, let’s dig into this quarter’s best and worst performers in the sit-down dining industry, including First Watch (NASDAQ:FWRG) and its peers.
Sit-down restaurants offer a complete dining experience with table service. These establishments span various cuisines and are renowned for their warm hospitality and welcoming ambiance, making them perfect for family gatherings, special occasions, or simply unwinding. Their extensive menus range from appetizers to indulgent desserts and wines and cocktails. This space is extremely fragmented and competition includes everything from publicly-traded companies owning multiple chains to single-location mom-and-pop restaurants.
The 12 sit-down dining stocks we track reported a mixed Q2. As a group, revenues beat analysts’ consensus estimates by 1% while next quarter’s revenue guidance was 5.4% below.
In light of this news, share prices of the companies have held steady. On average, they are relatively unchanged since the latest earnings results.
First Watch (NASDAQ:FWRG)
Based on a nautical reference to the first work shift aboard a ship, First Watch (NASDAQ:FWRG) is a chain of breakfast and brunch restaurants whose menu is heavily-focused on eggs and griddle items such as pancakes.
First Watch reported revenues of $307.9 million, up 19.1% year on year. This print was in line with analysts’ expectations, and overall, it was a strong quarter for the company with full-year EBITDA guidance exceeding analysts’ expectations and a solid beat of analysts’ same-store sales estimates.
"We delivered both positive same restaurant traffic growth and same restaurant sales growth in the second quarter, representing three consecutive quarters of sequential improvement,” stated Chris Tomasso, CEO and President of First Watch.
Interestingly, the stock is up 7.9% since reporting and currently trades at $18.59.
Is now the time to buy First Watch? Access our full analysis of the earnings results here, it’s free.
Best Q2: Kura Sushi (NASDAQ:KRUS)
Known for its conveyor belt that transports dishes to diners, Kura Sushi (NASDAQ:KRUS) is a chain of sushi restaurants serving traditional Japanese fare with a touch of modernity and technology.
Kura Sushi reported revenues of $73.97 million, up 17.3% year on year, outperforming analysts’ expectations by 2.5%. The business had a very strong quarter with a beat of analysts’ EPS estimates and an impressive beat of analysts’ EBITDA estimates.
Kura Sushi achieved the highest full-year guidance raise among its peers. Although it had a fine quarter compared its peers, the market seems unhappy with the results as the stock is down 6.1% since reporting. It currently trades at $81.46.
Is now the time to buy Kura Sushi? Access our full analysis of the earnings results here, it’s free.
Weakest Q2: Bloomin' Brands (NASDAQ:BLMN)
Owner of the iconic Australian-themed Outback Steakhouse, Bloomin’ Brands (NASDAQ:BLMN) is a leading American restaurant company that owns and operates a portfolio of popular restaurant brands.
Bloomin' Brands reported revenues of $1.00 billion, down 10.4% year on year, exceeding analysts’ expectations by 1.4%. Still, it was a softer quarter as it posted full-year EPS guidance missing analysts’ expectations significantly and EPS guidance for next quarter missing analysts’ expectations significantly.
Bloomin' Brands delivered the slowest revenue growth in the group. As expected, the stock is down 21.4% since the results and currently trades at $7.06.
Read our full analysis of Bloomin' Brands’s results here.
The Cheesecake Factory (NASDAQ:CAKE)
Celebrated for its delicious (and free) brown bread, gigantic portions, and delectable desserts, Cheesecake Factory (NASDAQ:CAKE) is an iconic American restaurant chain that also owns and operates a portfolio of separate restaurant brands.
The Cheesecake Factory reported revenues of $955.8 million, up 5.7% year on year. This number topped analysts’ expectations by 0.8%. Overall, it was a strong quarter as it also recorded an impressive beat of analysts’ EBITDA estimates and a beat of analysts’ EPS estimates.
The stock is down 3.6% since reporting and currently trades at $60.84.
Read our full, actionable report on The Cheesecake Factory here, it’s free.
Dine Brands (NYSE:DIN)
Operating a franchise model, Dine Brands (NYSE:DIN) is a casual restaurant chain that owns the Applebee’s and IHOP banners.
Dine Brands reported revenues of $230.8 million, up 11.9% year on year. This print beat analysts’ expectations by 3.3%. Aside from that, it was a mixed quarter as it also logged an impressive beat of analysts’ same-store sales estimates but a significant miss of analysts’ EBITDA estimates.
Dine Brands scored the biggest analyst estimates beat among its peers. The stock is up 8.5% since reporting and currently trades at $23.65.
Read our full, actionable report on Dine Brands here, it’s free.
Market Update
As a result of the Fed’s rate hikes in 2022 and 2023, inflation has come down from frothy levels post-pandemic. The general rise in the price of goods and services is trending towards the Fed’s 2% goal as of late, which is good news. The higher rates that fought inflation also didn't slow economic activity enough to catalyze a recession. So far, soft landing. This, combined with recent rate cuts (half a percent in September 2024 and a quarter percent in November 2024) have led to strong stock market performance in 2024. The icing on the cake for 2024 returns was Donald Trump’s victory in the U.S. Presidential Election in early November, sending major indices to all-time highs in the week following the election. Still, debates around the health of the economy and the impact of potential tariffs and corporate tax cuts remain, leaving much uncertainty around 2025.
Want to invest in winners with rock-solid fundamentals? Check out our 9 Best Market-Beating Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.
StockStory is growing and hiring equity analyst and marketing roles. Are you a 0 to 1 builder passionate about the markets and AI? See the open roles here.