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Key Takeaways

• Yum! Brands, Darden, and Shake Shack are Oppenheimer analysts' top investment picks for the restaurant industry in 2025.

• Their same-store sales forecasts, and in some cases, marketing efforts, appealed to the analysts.

• The broader industry is starting the year off in a healthier place, Oppenheimer said, adding that menu price hikes are slated to slow.

Olive Garden, KFC, and Shake Shack look like particularly appetizing investments in 2025, according to Oppenheimer analysts.

Yum! Brands (YUM), the parent company of KFC and Taco Bell; Darden Restaurants (DRI), the group behind Olive Garden and LongHorn Steakhouse; and the burger chain Shake Shack (SHAK) nabbed “top pick” distinctions in the investment firm’s 2025 restaurant outlook.

The trio stood out because of promising same-store sales forecasts and, in some cases, new leadership and marketing pushes, Oppenheimer analysts said in a note released Monday. The firm upgraded its ratings on all three companies to "outperform."

Analysts See Growth at Yum! Brands Units

In naming Yum! Brands one of its top picks, Oppenheimer analysts said that the restaurant giant posted declining same-store sales in 2024, but will likely experience a rebound in 2025. They anticipate growth across KFC’s global portfolio and at Taco Bell, which Oppenheimer expects to gain market share. Investing in Yum! Brands now is prudent, given that investor sentiment on the stock is “subdued,” the analysts said.

Same-store sales are also expected to improve at Darden, which will benefit as headwinds holding back fine dining die down, Oppenheimer said. The future looks particularly rosy at Olive Garden, the analysts said, highlighting that the restaurant chain is beginning to offer food delivery, and improving its marketing efforts.

Fresh leadership at Shake Shack appealed to Oppenheimer, which praised new Chief Executive Officer (CEO) Rob Lynch’s efforts to make the chain's restaurants more efficient and update the burger business’ approach to marketing.

Healthier Year Predicted for Restaurant Sector

The broader restaurant industry is poised for a healthier 2025 after foot traffic fell throughout most of 2024, the analysts said, noting that orders have picked up in recent months. A decline in menu price hikes could help sustain this momentum, the group said. Increases in ingredient, supply, and labor costs are leveling off, Oppenheimer said, estimating that average price increases will decline to 2% to 3% by the end of 2025.

“[Staff] turnover rates are hitting record lows,” the note said. “This is allowing restaurants to revert to normalized menu-price increases and enable ‘value’ offerings without disabling margins.”

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