Quarterly earnings results are a good time to check in on a company’s progress, especially compared to its peers in the same sector. Today we are looking at First Watch (NASDAQ: FWRG) and the best and worst performers in the sit-down dining industry.
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 13 sit-down dining stocks we track reported a mixed Q1. As a group, revenues beat analysts’ consensus estimates by 0.8% while next quarter’s revenue guidance was 2.3% below.
Luckily, sit-down dining stocks have performed well with share prices up 24.1% on average since the latest earnings results.
Weakest Q1: 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 $282.2 million, up 16.4% year on year. This print was in line with analysts’ expectations, but overall, it was a softer quarter for the company with full-year EBITDA guidance missing analysts’ expectations.
"First quarter same restaurant traffic results are encouraging and continued the trends we experienced exiting 2024, demonstrating both the strength and the resilience of the First Watch brand,” said Chris Tomasso, CEO and President of First Watch.
First Watch delivered the weakest performance against analyst estimates of the whole group. Unsurprisingly, the stock is down 18.8% since reporting and currently trades at $15.10.
Read our full report on First Watch here, it’s free.
Best Q1: Brinker International (NYSE: EAT)
Founded by Norman Brinker in Dallas, Brinker International (NYSE: EAT) is a casual restaurant chain that operates the Chili’s, Maggiano’s Little Italy, and It’s Just Wings banners.
Brinker International reported revenues of $1.43 billion, up 27.2% year on year, outperforming analysts’ expectations by 2.6%. The business had an exceptional quarter with a solid beat of analysts’ EBITDA estimates and an impressive beat of analysts’ same-store sales estimates.
Brinker International delivered the highest full-year guidance raise among its peers. The market seems happy with the results as the stock is up 9.6% since reporting. It currently trades at $176.
Is now the time to buy Brinker International? Access our full analysis of the earnings results 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 $64.89 million, up 13.3% year on year, in line with analysts’ expectations. It was a softer quarter as it posted a significant miss of analysts’ EBITDA estimates and a miss of analysts’ same-store sales estimates.
Kura Sushi delivered the weakest full-year guidance update in the group. Interestingly, the stock is up 97.7% since the results and currently trades at $81.75.
Read our full analysis of Kura Sushi’s results here.
Red Robin (NASDAQ: RRGB)
Known for its bottomless steak fries, Red Robin (NASDAQ: RRGB) is a chain of casual restaurants specializing in burgers and general American fare.
Red Robin reported revenues of $392.4 million, flat year on year. This result beat analysts’ expectations by 1.3%. It was a very strong quarter as it also produced an impressive beat of analysts’ EPS estimates and a solid beat of analysts’ EBITDA estimates.
The stock is up 74.6% since reporting and currently trades at $5.50.
Read our full, actionable report on Red Robin here, it’s free.
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 $927.2 million, up 4% year on year. This print met analysts’ expectations. Overall, it was a strong quarter as it also logged a solid beat of analysts’ EBITDA estimates and a decent beat of analysts’ EPS estimates.
The stock is up 18.9% since reporting and currently trades at $60.
Read our full, actionable report on The Cheesecake Factory 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.
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