Franchised fast-casual restaurants are expected to account for a significant market share in the coming years. This growth can be attributed to the convenience offered by these franchises through quick turnaround times, easy access, and availability of digital ordering options.
The U.S. restaurant industry is experiencing significant growth. By 2024, the industry is expected to exceed $1.10 trillion in sales for the first time, marking a substantial rebound from the pandemic years. Furthermore, between 2024 and 2032, the industry is projected to add 150,000 jobs per year on average, with total staffing levels reaching 16.9 million by 2032.
Against this backdrop, let’s compare two restaurant stocks, Dine Brands Global, Inc. (DIN) and Jack in the Box Inc. (JACK), to determine which restaurant stock is cooking up better returns.
The Case for Dine Brands Global, Inc. Stock
With a $513.28 million market cap, Dine Brands Global, Inc. (DIN) owns, franchises, and operates restaurants in the United States and internationally. The company operates through six segments: Applebee’s Franchise Operations; International House of Pancakes (IHOP) Franchise Solutions; Fuzzy’s franchise operations; Rental Operations; Financing Operations; and Company-Operated Restaurant Operations.
DIN’s stock has gained 11.1% over the past three months to close the last trading session at $33.55.
DIN’s trailing-12-month gross profit margin of 47.71% is 28% higher than the industry average of 37.27%. Also, the stock’s trailing-12-month EBIT margin of 22.60% is 183.8% higher than the industry average of 7.97%.
DIN’s total revenues for the third quarter ended June 30, 2024, came in at $208.40 million. Its adjusted EBITDA stood at $67 million. Its adjusted net income stood at $25.60 million. In addition, adjusted earnings per share at $1.71.
Street expects DIN’s revenue for the first quarter ending March 2025 to increase marginally year-over-year to $207.97 million. Its EPS is expected to grow 7.7% year-over-year to $1.43. Moreover, the company has surpassed EPS estimates in three of the trailing four quarters.
DINS’s POWR Ratings reflect its robust outlook. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
DIN has an A grade for Value and a B for Quality. It is ranked #2 out of 41 stocks in the Restaurants industry.
Click here for the additional POWR Ratings for DIN (Value, Stability, Sentiment, and Momentum).
The Case for Jack in the Box Inc. Stock
Valued at $869.47 million by market cap, Jack in the Box Inc. (JACK) operates and franchises Jack in the Box and Del Taco quick-service restaurants in the United States.
JACK’s stock has plunged 6.5% over the past three months to close the last trading session at $45.46.
In the fiscal third quarter that ended July 7, 2024, JACK’s revenues declined 7% year-over-year to $369.17 million, while its net loss was reported at $122.30 million. The company’s loss per common stood at $6.26.
Analysts expect JACK’s revenue for the fourth quarter (ended September 2024) to decrease 3.8% year-over-year to $358.20 million. The company’s EPS for the same quarter is expected to be $1.11.
JACK’s bleak fundamentals are reflected in its POWR Ratings. It has an overall rating of D, equating to a Sell in our proprietary rating system.
The stock has a D grade for Stability. Within the same industry, JACK is ranked #30.
In addition to the POWR Ratings I’ve just highlighted, you can see JACK’s ratings for Growth, Momentum, Quality, Value, and Sentiment here.
Dine Brands Global (DIN) vs. Jack in the Box (JACK): Which Restaurant Stock is Cooking Up Better Returns?
The U.S. restaurant industry's growth is driven by a shift in consumer spending toward dining experiences, increased online ordering, and improved economic conditions, including easing supply chain issues. Additionally, younger generations like Millennials and Gen Z are shaping dining trends with their preferences for casual and fast service
Leading restaurant companies DIN and JACK stand to capitalize on bright industry growth prospects. However, DIN’s strong financial results and promising near-term outlook favor it as the better restaurant stock pick.
Our research shows that the odds of success increase when one invests in stocks with an Overall Rating of Strong Buy or Buy. View all the top-rated stocks in the Restaurants industry here.
What To Do Next?
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About the Author: Nidhi Agarwal
Nidhi is passionate about the capital market and wealth management, which led her to pursue a career as an investment analyst. She holds a bachelor's degree in finance and marketing and is pursuing the CFA program. Her fundamental approach to analyzing stocks helps investors identify the best investment opportunities.
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