As the Q3 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 slower Q3. As a group, revenues missed analysts’ consensus estimates by 0.9%.

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 $251.6 million, up 14.8% year on year. This print fell short of analysts’ expectations by 2%, but it was still a satisfactory quarter for the company with a solid beat of analysts’ EBITDA estimates.

“We are pleased with our performance in Q3 as it reflects our teams’ superb restaurant-level operations, especially considering an uneven consumer backdrop. Traffic picked up through the quarter, our employee turnover once again improved and remains favorable relative to the industry as a whole and Adjusted EBITDA grew 18%,” said Chris Tomasso, First Watch CEO and President.

Interestingly, the stock is up 6.8% since reporting and currently trades at $19.50.

Is now the time to buy First Watch? Access our full analysis of the earnings results here, it’s free.

Best Q3: Brinker International (NYSE: EAT)

Founded by Norman Brinker in Dallas, Texas, Brinker International (NYSE: EAT) is a casual restaurant chain that operates under the Chili’s, Maggiano’s Little Italy, and It’s Just Wings banners.

Brinker International reported revenues of $1.14 billion, up 12.5% year on year, outperforming analysts’ expectations by 3.4%. The business had a stunning quarter with an impressive beat of analysts’ EBITDA estimates and optimistic earnings guidance for the full year.

Brinker International pulled off the biggest analyst estimates beat and highest full-year guidance raise among its peers. The market seems happy with the results as the stock is up 22.8% since reporting. It currently trades at $119.40.

Is now the time to buy Brinker International? Access our full analysis of the earnings results here, it’s free.

Weakest Q3: The ONE Group (NASDAQ: STKS)

Doubling as a hospitality services provider for hotels and resorts, The One Group Hospitality (NASDAQ: STKS) is an upscale restaurant company that operates STK Steakhouse and Kona Grill.

The ONE Group reported revenues of $194 million, up 152% year on year, falling short of analysts’ expectations by 10%. It was a disappointing quarter as it posted full-year revenue guidance missing analysts’ expectations and a miss of analysts’ EBITDA estimates.

The ONE Group delivered the fastest revenue growth but had the weakest performance against analyst estimates and weakest performance against analyst estimates in the group. As expected, the stock is down 20% since the results and currently trades at $3.14.

Read our full analysis of The ONE Group’s results here.

BJ's (NASDAQ: BJRI)

Founded in 1978 in California, BJ’s Restaurants (NASDAQ: BJRI) is a chain of restaurants whose menu features classic American dishes, often with a twist.

BJ's reported revenues of $325.7 million, up 2.2% year on year. This print met analysts’ expectations. Zooming out, it was a softer quarter as it recorded a miss of analysts’ EBITDA and earnings estimates.

The stock is down 6% since reporting and currently trades at $34.84.

Read our full, actionable report on BJ's here, it’s free.

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 $66.01 million, up 20.2% year on year. This print surpassed analysts’ expectations by 3.1%. Overall, it was a very strong quarter as it also logged an impressive beat of analysts’ earnings and EBITDA estimates.

The stock is down 11.8% since reporting and currently trades at $91.

Read our full, actionable report on Kura Sushi here, it’s free.

Market Update

As expected, the Federal Reserve cut its policy rate by 25bps (a quarter of a percent) in November 2024 after Donald Trump triumphed in the US Presidential election. This marks the central bank's second easing of monetary policy after a large 50bps rate cut two months earlier. Going forward, the markets will debate whether these rate cuts (and more potential ones in 2025) are perfect timing to support the economy or a bit too late for a macro that has already cooled too much. Adding to the degree of difficulty is a new Republican administration that could make large changes to corporate taxes and prior efforts such as the Inflation Reduction Act.

Want to invest in winners with rock-solid fundamentals? Check out our Top 5 Growth Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.

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