An industry that has never ceased to be significant is food. And when it comes to fast food, people openly proclaim their undying love for juicy burgers, appetizing pizzas, grilled sandwiches, delicious ice creams, and what not.

Evidently, notwithstanding a long list of market apprehensions, restaurant stocks proved to be safe havens for investors in the first half of 2016. Further, with more people choosing to dine out these days, it is needless to say that the restaurant industry is poised to rake in more returns going ahead.

What’s Driving the Restaurant Stocks?  

The U.S. restaurant industry gained momentum at the start of 2016 on the back of improving consumer spending patterns, which in turn were positively influenced by rising wages and cheaper fuel. As dining out is usually directly proportional to consumers’ disposable income, restaurant sales are projected to rise further this year.

According to the industry forecast released by the National Restaurant Association (NRA) for 2016, sales at restaurants are projected to witness an upswing this year. The NRA estimates restaurant sales at around $782.7 billion in 2016.

5 Winners in 1H16  

With the help of the Zacks Stock Screener, we have zeroed-in on five stocks in the Retail-Restaurants industry with a top Zacks Rank and a VGM Score of ‘A’.

Back-tested results show that stocks with a VGM Score of A or B and a Zacks Rank #1 (Strong Buy) or 2 (Buy) garner better returns, on an average, than individual components, as it considers three times as many items that are correlated to stock returns.

Here are the five restaurant stocks that have had a successful run so far this year and are poised for growth in the days ahead.

Based in Texas, Dave & Buster's Entertainment, Inc. (PLAY - Snapshot Report) began trading in Oct 2014. The core concept of the restaurateur is “Eat Drink Play and Watch”, all in one location. Its menu comprises “Fun American New Gourmet” entrées and appetizers and a full selection of non-alcoholic and alcoholic beverages. Notably, the long-term growth prospects of this Zacks Rank #1 (Strong Buy) company are compelling, given its strong sales, earnings growth and significant margin improvement.

Interestingly, in the first six months of 2016, the stock has surged over 12%. Moreover, the company has been seeing an upward trend in earnings estimate revision. Over the past 60 days, the Zacks Consensus Estimate has increased 10.1% for both 2016 and 2017 earnings. Further, for full-year 2016, sales growth is pegged at 14.4% while EPS is expected to grow a solid 29.2%.

Headquartered in Syracuse, NY,Carrols Restaurant Group, Inc. (TAST - Snapshot Report) operates through its subsidiaries and is one of the largest restaurant companies in the U.S. This Zacks Rank #1 company is the largest Burger King franchisee, based on restaurant count. The company’s astounding earnings growth, significant improvement in the top line and operating margin along with innovative product introductions hold well for long-term growth.

Notably, in the first six months of 2016, the stock has returned nearly 4%. Moreover, the company has been seeing an upward trend in earnings estimate revision. Over the past 60 days, the Zacks Consensus Estimate for 2016 and 2017 earnings have increased 11.3% and 1.4%, respectively. Additionally, for full-year 2016, sales growth is pegged at 10.5% while EPS is likely to grow a solid 55.3%.

Headquartered in Louisville, KY, Papa John's International Inc. (PZZA - Analyst Report) operates & franchises pizza delivery and carry-out restaurants under the brand Papa John's. To become the leading chain of pizza delivery restaurants in each of its targeted markets, the company has developed a strategy to enhance customer satisfaction and retention, as well as establish recognition and acceptance of the brand. Notably, in this regard, this Zacks Rank #2 (Buy) company’s focus on menu innovation, promotional offers and foray into technology bodes well.

Notably, the stock has surged nearly 25% in the first six months of 2016. Upward estimate revisions for 2016 and 2017 earnings add to the optimism. The Zacks Consensus Estimate for 2016 and 2017 EPS have scaled 2.1% and 1.1%, respectively, over the last 60 days. Moreover, for full-year 2016, sales and EPS are projected to grow a respective 4.1% and 15.5%.

BJ's Restaurants, Inc. (BJRI - Analyst Report) owns and operates a chain of high-end casual dining restaurants in the U.S., which serve its signature deep-dish pizzas, salads, sandwiches, burgers, pastas, steaks and hand-crafted beers. Notably, the stock has returned over 4% in the first half of 2016.

Going forward, we expect this Zacks Rank #2 company’s Project Q initiatives, streamlined and innovative menu, prudent expansion plans along with various marketing, operational and technology-driven plans to boost sales. What’s more, for full-year 2016, sales growth is pegged at 10.8% while EPS is likely to grow a healthy 22.1%.

Calabasas Hills, CA, The Cheesecake Factory Incorporated (CAKE - Analyst Report) operates many upscale, high volume casual dining restaurants. Notably, Cheesecake Factory restaurants have posted positive comps in 25 consequent quarters. Going forward, various initiatives to boost sales and traffic volumes like roll out of an improved server training program and its mobile payment app coupled with menu innovation should aid in keeping up the trend of positive comps.

Notably, this Zacks Rank #2 company has returned over 4% in the first half of 2016. The company’s differentiated menu, operational distinction and unique ambiance has been appealing to customers. Further, for full-year 2016, sales growth is poised at 8.6% while EPS is expected to grow 12.8%.  

Going Ahead

The rosy forecast for restaurants in 2016 is supported by the industry’s recent projections. At this juncture, adding restaurant stocks to your portfolio might be a prudent move.

Meanwhile, though the restaurant industry has had its share of pitfalls in the form of high labor costs, unfavorable currency impact, a weak Chinese economy and a tightening labor market, strong fundamentals and effective sales initiatives have kept it going. We expect the industry to sustain the momentum going ahead, allowing investors to cash in on the bountiful opportunities in the space.