Driven by the popularity of online food delivery services and a rising disposable personal income, the food services market is seeing rapid growth. Amid this backdrop, investors could scoop up shares of fundamentally stable consumer experience stocks, Starbucks Corporation (SBUX), Luckin Coffee Inc. (LKNCY), and Nathan’s Famous, Inc. (NATH).

The global dining landscape is transforming as consumers are prioritizing convenience and flexibility. Restaurants are adopting online ordering and pre-order systems, redefining dining experiences. This shift has enabled customers to enjoy meals effortlessly, fostering a tech-driven food culture that is blending accessibility with modern lifestyles.

Cafés and coffee brands are also leveraging digital platforms to meet evolving demands. They are integrating mobile ordering, personalized services, and rapid delivery to enhance customer satisfaction. This trend is reshaping the food and beverage industry, creating a seamless fusion of innovation and convenience.

According to Statista, the global online food delivery market is forecasted to reach $1.91 trillion by 2029, growing at a CAGR of 7.9%. This growth can also be attributed to rising disposable personal income (DPI) and personal consumption expenditure (PCE), despite persistent inflationary pressures impacting global economies.

In November 2024, DPI and PCE increased by $61.1 billion and $81.3 billion, marking respective month-over-month growth rates of 0.3% and 0.4%. Supported by these favorable economic indicators, the global food service market is forecasted to hit $4.14 trillion by 2033, growing at a CAGR of 3.2%.

So now let us dive deep into the fundamentals of three Restaurants stocks, starting with #3.

Stock #3: Starbucks Corporation (SBUX)

SBUX operates as a roaster, marketer, and retailer of coffee. The company functions through three segments: North America; International; and Channel Development. Its stores offer coffee, tea, and other beverages, roasted whole beans and ground coffees, single-serve products, ready-to-drink beverages, and more.

SBUX’s trailing-12-month EBITDA margin of 18.58% is 62.2% higher than the industry average of 11.46%. Its trailing-12-month levered FCF margin of 5.98% is 32% higher than the sector average of 4.53%. Likewise, the stock’s trailing-12-month asset turnover ratio of 1.19x is 20.1% higher than the industry average of 0.99x.

For the fiscal 2024 fourth quarter that ended September 29, SBUX’s total net revenues came in at $9.07 billion. Its non-GAAP operating income was reported to be $1.31 billion. Additionally, net earnings attributable to SBUX and non-GAAP EPS amounted to $909.30 million and $0.80, respectively.

Analysts expect SBUX’s revenue and EPS for the fiscal year ending September 2026 to increase 6.9% and 20% year-over-year to $39.81 and $3.73, respectively.

Shares of SBUX surged 28% over the past six months to close the last trading session at $93.08.

SBUX’s POWR Ratings reflect its fundamentals. It has a B grade for Quality. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.

Within the Restaurants industry, SBUX is ranked #24 out of 39 stocks. In addition to the POWR Rating highlighted above, you can check SBUX’s ratings for Value, Growth, Sentiment, Momentum, and Stability here.

Stock #2: Luckin Coffee Inc. (LKNCY)

Headquartered in Xiamen, China, LKNCY offers retail services of freshly brewed drinks, and pre-made food and beverage items. The company operates pick-up stores, relax stores, and delivery kitchens under the Luckin brand, Luckin mobile app, Weixin mini-program, and more.

LKNCY’s trailing-12-month gross profit margin of 56.85% is 50.2% higher than the industry average of 37.86%. Its trailing-12-month ROCE of 26.12% is 137.6% higher than the 10.99% industry average. Additionally, the stock’s trailing-12-month net income margin of 7.48% is 71.7% higher than the sector average of 4.35%.

For the fiscal 2024 third quarter that ended September 30, LKNCY’s total net revenues increased 41.4% year-over-year to $1.45 billion. Its non-GAAP operating income rose 61.5% from the year-ago value to $236.15 million.

Moreover, the company’s non-GAAP net income and non-GAAP net income per share grew 22.5% and 22.2% from the prior year’s quarter to $199.80 million and $0.08, respectively.

Street expects LKNCY’s revenue and EPS for the fiscal year ending December 2025 to increase 21.4% and 36.9% year-over-year to $5.80 billion and $1.50, respectively.

LKNCY’s shares have surged 9.8% over the past three months and 25.7% over the past six months to close the last trading session at $25.39.

LKNCY’s POWR Ratings reflect its robust prospects. The stock has an overall rating of B, equating to a Buy in our proprietary rating system.

LKNCY has an A grade for Quality and a B for Sentiment. Within the Restaurants industry, LKNCY is ranked #5 out of 39 stocks.

Click here to access LKNCY’s ratings for Momentum, Stability, Value, and Growth.

Stock #1: Nathan’s Famous, Inc. (NATH)

NATH owns and franchises restaurants under the Nathan’s Famous brand name and sells its products under the Nathan’s Famous trademarks. The company also manufactures, distributes, markets and sells its Nathan’s Famous branded hot dogs and sausages through retail channels like supermarkets, groceries, mass merchandisers, and club stores.

NATH’s trailing-12-month EBITDA margin of 25.26% is 120.5% higher than the industry average of 11.46%. Its trailing-12-month levered FCF margin of 13.88% is 206.3% higher than the sector average of 4.53%. Furthermore, the stock’s trailing-12-month net income margin of 15.18% is 248.7% higher than the 4.35% industry average.

For the fiscal 2025 second quarter that ended September 29, 2024, NATH’s total revenues increased 6.1% year-over-year to $41.11 million. Its income from operations rose 5.8% from the year-ago value to $9.63 million.

Additionally, the company’s net income and net income per share grew 5.6% and 5% from the prior year’s quarter to $6.03 million and $1.47, respectively.

Shares of NATH have surged 10.8% over the past six months and 20.2% over the past nine months to close the last trading session at $78.47.

NATH’s strong fundamentals are mirrored in its POWR Ratings. The stock has an overall rating of A, translating to a Strong Buy in our proprietary rating system.

NATH has an A grade for Quality and a B for Sentiment. It has topped the 39-stock Restaurants industry.

To access NATH’s Momentum, Stability, Value, and Growth ratings, click here.

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SBUX shares were unchanged in premarket trading Thursday. Year-to-date, SBUX has gained 2.01%, versus a 1.14% rise in the benchmark S&P 500 index during the same period.

About the Author: Aritra_Gangopadhyay

Aritra is a financial journalist dedicated to breaking down complex financial topics into simple, actionable insights. Holding a Master’s degree in Economics, he uses his analytical expertise to help investors uncover unique opportunities for long-term success. More...

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