Which Foodservice Ops Bear Watching for Restaurant Investment?

When it comes to investments in food service opportunities, the menu is increasingly enticing for a restaurant investment. In fact, Wall Street has served up several successful IPOs over the past year, and the Wingstop offering got a lot of attentionafter soaring more than 60 percent when it started trading. The Right Time for the Right Restaurants Just as restaurant fads come and go, the IPO market has its ups and downs. However, food is hot right now, and the trend has a number of private equity groups and others searching for the next exciting restaurant investment. As Wingstop, Shake Shack and several other recent public offerings show, the interest in fast casual is attracting a lot of capital to support rapid growth of these food choices. However, if you are looking at a solid restaurant investment with the most upside, you might want to look at those chains with an established track record. The tradition on Wall Street is for newly public companies to have a quick rise, then a period of settling down and working out their kinks. However, once a management team shows success at managing its growth profitably, many restaurants enjoy the benefit of the “cookie-cutter effect.” This means they learn how to grow revenue and earnings efficiently. If you are interested in the food service business from a restaurant chain perspective, it’s worth your time to check out these proven performers who are making their stock a more attractive restaurant investment: Darden Inc. (DRI). While you might not recognize the company name, virtually every American has dined at one or more of its brands: Bahama Breeze, Olive Garden, Seasons 52, LongHorn Steakhouse, Eddie V’s, The Capital Grille, and Yard House. The decline in gas prices is just one factor driving interest in this firm. Cracker Barrel Old Country Store Inc. (CBRL). Long a southern favorite, this chain has successfully expanded to more than 630 locations in 42 states. Investors have remained loyal to this chain because of its consistent growth in sales and earnings.