What's in Store for These 3 Restaurant Stocks in Q1 Earnings?

The restaurant industry continues to navigate a dynamic environment shaped by ongoing digital innovation, evolving consumer expectations, and broader economic pressures. Although companies are exposed to tariff-related uncertainties, emphasis on alternative raw material solutions, compelling product offerings, and value propositions is likely to have aided the respective companies' performance in the first quarter. Companies in the broader Retail-Wholesale sector, such as Potbelly Corporation PBPB, Dine Brands Global, Inc. DIN, and Bloomin' Brands, Inc. BLMN, are set to report their first-quarter earnings on May 7.

Operators across the sector are likely to have witnessed growth by embracing strategic marketing, expanding store footprints, digitizing service channels, and refreshing their menus to align with consumer tastes. Some companies are evolving their promotional strategies, shifting from broad-based offer testing to more targeted, personalized campaigns. By tailoring promotions based on member behavior, activity, and individual attributes, companies are driving higher levels of engagement, as consumers respond more positively to offers that feel timely and relevant.

The adoption of in-store prioritization systems and data-driven tools is likely to have enabled restaurants to optimize order sequencing and improve back-of-house efficiency. In parallel, adjustments to pricing models, including identifying key thresholds in value perception, are likely to have aided the respective companies to maintain relevance and sustain customer loyalty in the first quarter.

The restaurant industry continues to face significant macroeconomic headwinds. Inflationary pressures, global uncertainties, and fluctuating consumer sentiment, especially among lower-income households, are likely to have affected spending patterns. In fact, elevated levels of consumer uncertainty have already begun to influence purchasing behavior, resulting in a noticeable shift in underlying transaction trends for some operators. Additionally, currency volatility is creating financial challenges for international operations.

Per the latest Earnings Outlook, total earnings of the Zacks Retail-Wholesale sector are expected to rise 1.6% year over year. In the fourth quarter of 2024, the sector’s earnings were up 26.4% year over year. Meanwhile, revenues for the sector are expected to rise 4% year over year. In the previous quarter, the sector’s revenues gained 5.1% year over year.

Sneak Peek Into Upcoming Earnings Releases

Amid a number of stocks, to identify those with the potential to beat earnings estimates, the following Zacks methodology can be used. The Zacks model suggests that a company needs to have the right combination of the two key ingredients — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy), or 3 (Hold) — to increase the odds of an earnings beat. You can uncover the best stocks before they’re reported with our Earnings ESP Filter.

Here are three bundled stocks that are set to report their first-quarter earnings.

Potbelly is scheduled to report results after the closing bell.

The company’s first-quarter performance is likely to have benefited from ongoing digital momentum and the successful relaunch of its Perks loyalty program. Investments in consumer-facing digital assets and data analytics are expected to have supported higher engagement and improved customer frequency. Menu innovation, including the introduction of new signature sandwiches and craveable sauces, is also likely to have driven higher check averages and attracted new customers. The company’s focus on shop-level margin improvement and disciplined corporate cost control likely provided a cushion to profitability in the first quarter. Strategic unit expansion, along with strong franchise development activity, may also have contributed positively.

However, adverse weather conditions in January and February are likely to have reduced same-store sales growth by approximately 150 basis points and adjusted EBITDA by about $600,000. In addition, labor cost pressures and occupancy cost increases could have constrained margin expansion in the first quarter. Ongoing concerns regarding consumer discretionary spending may also have weighed on traffic and sales during the quarter.

The Zacks Consensus Estimate for Potbelly’s first-quarter 2025 revenues is pegged at $112.6 million, indicating growth of 1.3% from the year-ago figure. Earnings per share (EPS) are pegged at a loss of 2 cents, indicating a deterioration of 300% from earnings of 1 cent reported in the year-ago quarter. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)

The company has an Earnings ESP of 0.00% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Potbelly Corporation Price and EPS Surprise

Potbelly Corporation price-eps-surprise | Potbelly Corporation Quote

Dine Brands is scheduled to report results before the opening bell.

Dine Brands’ first-quarter performance is likely to have benefited from its strategic emphasis on operational improvements and brand revitalization efforts. The company’s focus on enhancing the guest experience through the Applebee’s Looking Good reimage program, paired with new marketing campaigns and loyalty program enhancements, is likely to have driven increased guest engagement and frequency in the first quarter. Continued innovation around core menu categories — such as appetizers, handhelds, and beverages — along with compelling value platforms like the "Really Big Meal Deal" and Applebee’s evolving two for $25 promotion, are likely to have boosted average check sizes and supported off-premise sales growth.

However, ongoing macroeconomic headwinds — such as elevated inflation and cautious consumer discretionary spending — may have tempered traffic gains and added volatility to the company’s performance in the first quarter.

The Zacks Consensus Estimate for Dine Brands’ first-quarter 2025 revenues is pegged at $215.3 million, indicating growth of 4.4% from the year-ago figure. EPS is pegged at $1.18, indicating a deterioration of 11.3% from $1.33 reported in the year-ago quarter.

The company has an Earnings ESP of -8.78% and a Zacks Rank #4 (Sell).

DINE BRANDS GLOBAL, INC. Price and EPS Surprise

DINE BRANDS GLOBAL, INC. price-eps-surprise | DINE BRANDS GLOBAL, INC. Quote

Bloomin' Brands is scheduled to report results before the opening bell.

The company’s first-quarter performance is likely to have benefited from off-premise channels, remodeling efforts and technology upgrades. This and emphasis on menu simplifications (based on customer feedback), refinement of marketing and promotional strategy, and strategic Ziosk partnership are likely to have aided the company’s performance in the first quarter.

However, domestic traffic softness and lower royalty contributions from Brazil are likely to have negatively impacted the company’s performance in the first quarter. This and inflationary pressures in commodities and wage pressures are likely to have negatively affected the bottom line in the first quarter.

The Zacks Consensus Estimate for Bloomin' Brands’ first-quarter 2025 revenues and EPS is pegged at $1.04 billion and 57 cents, indicating deterioration of 13.3% and 18.6%, respectively, from the year-ago figures.

The company has an Earnings ESP of -1.77% and a Zacks Rank #4.

Bloomin' Brands, Inc. Price and EPS Surprise

Bloomin' Brands, Inc. price-eps-surprise | Bloomin' Brands, Inc. Quote

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research