DA Davidson sees U.S. restaurants primed for rebound in 2026

Investing.com -- DA Davidson has initiated coverage of 14 U.S. restaurant companies, highlighting a “good 2026 setup” as valuations near three-year lows and the industry shows early signs of improvement, according to analysts led by Matt Curtis.

The research firm sees “some early signs of a healthier environment for restaurants in 2026, including a rebound in consumer sentiment since November led by younger and lower-income consumers that pulled back the most last year.”

Proprietary survey data also suggests optimism, with more respondents expecting to use restaurants this year than fewer.

DA Davidson noted that “steadily easing commodities and more predictable labor costs should provide greater bottom-line visibility in 2026, with broad-based margin expansion poised to resume in the second half.”

Price reductions on menus at many chains are expected to boost traffic, while initial guidance appears achievable and may lead to upward estimate revisions.

Among the firm’s top picks, Chipotle Mexican Grill, Inc. (NYSE: CMG) leads with a $51 price target, driven by initiatives including a doubling of limited-time offerings. “A number of sales driving initiatives…are likely to deliver a significant comp rebound in FY26,” DA Davidson said.

Wingstop Inc. (NASDAQ: WING) (PT $330) and Shake Shack Inc. (NYSE: SHAK) (PT $125) also received Buy ratings, with DA Davidson highlighting Wingstop’s digital transformation and Shake Shack’s menu innovation, marketing, and alternative formats as key growth drivers.

Elsewhere, Black Rock Coffee Bar (NASDAQ: BRCB), Dutch Bros (NYSE: BROS), First Watch Restaurant (NASDAQ: FWRG), and Kura Sushi (NASDAQ: KRUS) were assigned Buy ratings, while BJ’s Restaurants (NASDAQ: BJRI), Brinker International (NYSE: EAT), CAVA Groups (NYSE: CAVA), El Pollo Loco Holdings (NASDAQ: LOCO), Portillo’s (NASDAQ: PTLO), Starbucks (NASDAQ: SBUX) and Sweetgreen (NYSE: SG) were given Neutral ratings.

Overall, DA Davidson said restaurant stocks are “well positioned to outperform through the balance of 2026,” favouring brands with pricing power and long-term development potential.

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