Wrapping up Q3 earnings, we look at the numbers and key takeaways for the sit-down dining stocks, 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 Q3. As a group, revenues were in line with analysts’ consensus estimates.
Thankfully, share prices of the companies have been resilient as they are up 9.6% on average 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 $316 million, up 25.6% year on year. This print exceeded analysts’ expectations by 1.9%. Overall, it was a very strong quarter for the company with an impressive beat of analysts’ same-store sales estimates and an impressive beat of analysts’ EBITDA estimates.
“Our strong third quarter results and sequential year-to-date improvement in same restaurant traffic growth, same restaurant sales growth, and restaurant-level operating profit margin, are testament to the enduring strength of our business model and the efforts of our teams,” stated Chris Tomasso, CEO and President of First Watch.
First Watch scored the fastest revenue growth of the whole group. Unsurprisingly, the stock is up 16.4% since reporting and currently trades at $18.45.
Is now the time to buy First Watch? Access our full analysis of the earnings results here, it’s free for active Edge members.
Best Q3: 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 $928.8 million, down 10.6% year on year, outperforming analysts’ expectations by 2.7%. The business had a stunning quarter with a beat of analysts’ EPS estimates and an impressive beat of analysts’ EBITDA estimates.
Although it had a fine quarter compared its peers, the market seems unhappy with the results as the stock is down 2.6% since reporting. It currently trades at $7.04.
Is now the time to buy Bloomin' Brands? Access our full analysis of the earnings results here, it’s free for active Edge members.
Slowest Q3: Denny's (NASDAQ:DENN)
Open around the clock, Denny’s (NASDAQ:DENN) is a chain of diner restaurants serving breakfast and traditional American fare.
Denny's reported revenues of $113.2 million, up 1.3% year on year, falling short of analysts’ expectations by 3.2%. It was a disappointing quarter as it posted a significant miss of analysts’ revenue estimates and a miss of analysts’ EBITDA estimates.
Interestingly, the stock is up 50.1% since the results and currently trades at $6.17.
Read our full analysis of Denny’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 $265.1 million, down 3.5% year on year. This result beat analysts’ expectations by 3.3%. It was a very strong quarter as it also logged an impressive beat of analysts’ EBITDA estimates and a solid beat of analysts’ revenue estimates.
Red Robin pulled off the biggest analyst estimates beat among its peers. The stock is down 9% since reporting and currently trades at $4.28.
Read our full, actionable report on Red Robin here, it’s free for active Edge members.
Texas Roadhouse (NASDAQ:TXRH)
With locations often featuring Western-inspired decor, Texas Roadhouse (NASDAQ:TXRH) is an American restaurant chain specializing in Southern-style cuisine and steaks.
Texas Roadhouse reported revenues of $1.44 billion, up 12.8% year on year. This number surpassed analysts’ expectations by 0.7%. More broadly, it was a mixed quarter as it also recorded a solid beat of analysts’ same-store sales estimates but a miss of analysts’ EBITDA estimates.
The stock is up 10% since reporting and currently trades at $176.75.
Read our full, actionable report on Texas Roadhouse here, it’s free for active Edge members.
Market Update
The Fed’s interest rate hikes throughout 2022 and 2023 have successfully cooled post-pandemic inflation, bringing it closer to the 2% target. Inflationary pressures have eased without tipping the economy into a recession, suggesting a soft landing. This stability, paired with recent rate cuts (0.5% in September 2024 and 0.25% in November 2024), fueled a strong year for the stock market in 2024. The markets surged further after Donald Trump’s presidential victory in November, with major indices reaching record highs in the days following the election. Still, questions remain about the direction of economic policy, as potential tariffs and corporate tax changes add uncertainty for 2025.
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