10 Best Restaurant Stocks To Buy According to Analysts

3. Potbelly Corporation (NASDAQ:PBPB)

Average Share Price Upside Potential as of November 12: 47.14%

Potbelly Corporation (NASDAQ:PBPB) is an American corporation that owns the fast-casual restaurant chain, Potbelly Sandwich Shop. According to CNBC, there are 424 restaurants of the brand across 31 states and the District of Columbia. Amongst these, 345 are company-owned, while 79 are operated by franchisees.

Potbelly Corporation (NASDAQ:PBPB) announced its Franchise Growth Acceleration Initiative in March 2022, as part of which it aims to reach 2,000 restaurants over the next several years, with at least 85% of these shops being franchised. Total year-to-date shop commitments for 2024 are at 86 as of Q3 2024, an increase of 32 relative to the prior quarter. This has brought Potbelly’s open and committed shops to 695 across 33 franchise groups.

On November 7, Potbelly Corporation (NASDAQ:PBPB) announced financial results for the third quarter of fiscal year 2024, highlighting growth amid re-franchising efforts. System-wide sales in Q3 reached $139.2 million in Q3, up 1% year-over-year, due to system-wide unit growth. Revenue for the quarter was posted at $115.1 million, decreasing 4.7% last year due to the impact of re-franchising efforts.

Revenue from company-operated restaurants totaled $110.8 million. The remaining was contributed by franchise revenue that grew by $1.9 million, or 79.2% from last year, driven by a 30% increase in franchised units. Shop-level margin expanded by 70 basis points to 15.3%. Adjusted EBITDA for the quarter was posted at $8.7 million, representing 7.5% of total revenue. This was a 19% improvement from last year and was attributed to an increase in shop-level margin, disciplined G&A spending, and a strong performance of its franchise shops.

Potbelly Corporation (NASDAQ:PBPB) anticipates 2024 to be the best unit growth year for the company since 2017 by ending the year with a record number of franchise shops, which are expected to represent 22% of the system. It is one of the best restaurant stocks to buy according to analysts, with a consensus Strong Buy rating.