The reliable way to compare restaurant stocks is to work from operating definitions to economics and only then to valuation: first align each company’s comparable-sales calculation and split the result into transactions and average check; next compare margins with the same accounting scope while showing franchise and company-operated mix; finally compare valuation multiples using the same share-price date and earnings basis. A positive comparable-sales percentage, a high margin, or a low P/E is not meaningful in isolation.
The examples below use fiscal-year 2025 results reported in 2026. They show how to do the analysis, not a live ranking or a buy-or-sell recommendation. Refresh filings, prices and earnings estimates before making an investment decision.
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Why restaurant metrics are easy to misread
Restaurant companies often headline “same-store sales,” “comparable sales” or “comparable restaurant sales.” Those labels sound standardized, but each issuer sets the population, time threshold, geography and exclusions. A one-point difference can reflect methodology rather than customer demand.
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Margins have the same problem. A restaurant-level margin can cover only the economics of open units, while a consolidated operating margin includes corporate expenses and reflects how the company records franchised revenue. A heavily franchised business can report a very different revenue base and capital requirement from a company that operates most of its restaurants.
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Valuation adds a third layer. A P/E is only comparable when the price date, trailing or forward earnings period, and GAAP or adjusted denominator match. Lower is not automatically cheaper: growth, leverage, leases, temporary earnings effects and margin durability all affect what a multiple means.
Start with each company’s comparable-sales definition
Check the eligibility rules
Before placing two percentages in a spreadsheet, copy the definition from each company’s latest annual filing. Record:
- The minimum operating period for an eligible restaurant.
- Whether temporarily closed locations remain in the comparison.
- The countries, regions and sales channels included.
- Whether the figure is company-owned, franchised or systemwide.
- How currency translation and hyperinflationary markets are treated.
- The exact prior-year period used as the comparison.
For example, McDonald’s 2025 Form 10-K says its comparable sales compare with the same prior-year period and include restaurants operating for at least 13 months, including temporarily closed restaurants. The calculation excludes currency translation and sales from hyperinflationary markets. McDonald’s also distinguishes systemwide sales, which include franchised and company-operated restaurants.
Chipotle’s 2025 Form 10-K defines comparable restaurant sales as the period-over-period change in total revenue for company-owned restaurants open for at least 13 full calendar months. Both companies use a 13-month threshold, but their stated populations and exclusions differ. Treat the figures as issuer-defined metrics, not perfectly standardized industry data.
| Definition item | McDonald’s FY2025 filing | Chipotle FY2025 filing |
|---|---|---|
| Eligibility threshold | Restaurants operating at least 13 months | Company-owned restaurants open at least 13 full calendar months |
| Temporary closures | Included, according to the filing | Not stated in the cited definition |
| Population | Comparable-sales metric; systemwide sales separately include franchised and company-operated restaurants | Company-owned restaurant revenue |
| Currency and geography exclusions | Excludes currency translation and sales from hyperinflationary markets | Use the filing’s stated scope; the cited definition does not establish the same exclusions |
When a cell is not stated by the issuer, leave it as “not stated” and investigate the filing rather than assuming the companies use identical rules.
Break the percentage into transactions and check
A comparable-sales change combines the number of customer transactions with the dollars spent per transaction. McDonald’s states in its 2025 Form 10-K: “Comparable sales are driven by changes in guest counts and average check, the latter of which is affected by changes in pricing and product mix.” The sentence is attributed to McDonald’s Corporation’s filing, not to a named executive.
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Conceptually, the relationship is:
Comparable sales change ≈ transaction change + average-check change + interaction.
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1Clear out junk files and repair common Windows errors2Fix the driver behind crashes, sound loss and screen glitches3Repair Windows errors before they cause bigger problemsThe interaction term means the two percentages do not always add exactly. More important, a higher check can come from menu-price increases or a shift toward more expensive products while transactions fall. That is not the same demand signal as both traffic and check rising.
Chipotle reported that comparable restaurant sales decreased 1.7% in 2025, with transactions down 2.9% and average check up 1.2%. The figures were reported in its February 3, 2026 results release for fiscal 2025. Digital sales were 36.7% of total food-and-beverage revenue in that same report. The example shows why “comp down” should be accompanied by its components: pricing and mix lifted the check, but fewer transactions more than offset that increase.
Compare margins only after matching the scope
Restaurant-level versus consolidated margin
A restaurant-level operating margin generally measures the revenue and direct costs of restaurants. A consolidated operating margin is operating income divided by total reported company revenue and includes corporate-level effects. Neither label is automatically superior; they answer different questions.
| Margin measure | What it generally tells you | Questions to verify |
|---|---|---|
| Company-operated restaurant margin | Unit-level sales less food and paper, payroll and benefits, occupancy and other restaurant operating expenses | Are support costs, pre-opening costs or unusual items excluded? |
| Franchised restaurant margin | Franchised-restaurant revenue less franchised occupancy costs in McDonald’s stated definition | Does the numerator represent royalties and rent rather than the franchisee’s full store sales? |
| Consolidated operating margin | Operating income divided by total company revenue | What corporate overhead, restructuring, impairment or other unusual items are included? |
McDonald’s explains its company-operated restaurant margin as sales less food and paper, payroll and benefits, occupancy and other restaurant operating expenses; certain non-restaurant support costs in selling, general and administrative expense are outside that measure. Its franchised restaurant margin is franchised-restaurant revenue less franchised occupancy costs. Read the definitions in the McDonald’s 2025 Annual Report before comparing the percentage with another issuer’s non-GAAP restaurant margin.
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Franchise royalties and rent can produce high margins on the franchisor’s recorded revenue because the franchisee bears most store-level labor, food and maintenance costs. A company-operated restaurant records the full meal sale but also records those expenses. As a result, franchise-heavy and company-operated models can show different revenue, margin and capital-intensity profiles even when the underlying customer demand is similar.
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McDonald’s reported that franchised restaurant margins represented approximately 90% of restaurant margin dollars in 2025. That fact helps explain why its consolidated margin should not be read as a direct measure of the margin earned by an individual restaurant. For every company, note the share of franchised and company-operated units, who funds new units and remodels, and whether lease obligations sit with the parent or franchisees.
Use a dated consolidated figure without mixing it with a unit margin
McDonald’s reported a 46.1% operating margin in 2025 versus 45.2% in 2024. The filing defines this as operating income as a percentage of total revenues, so it is a consolidated measure. It should not be placed in the same “restaurant-level margin” column as a competitor’s store-level percentage.
Explain the drivers and the direction
Track at least four years when available and annotate each change. Common drivers include:
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- Sales leverage when comparable or new-unit sales grow faster than fixed costs.
- Food, packaging and commodity inflation.
- Wage and benefits inflation, staffing levels and overtime.
- Occupancy, rent and lease renewals.
- Promotional discounts, loyalty offers and product mix.
- Delivery commissions and other channel costs.
- Temporary closures, remodels, weather and impairment charges.
Management’s explanation in a filing is evidence of what the company attributed to the change, not proof that the driver will persist. Separate recurring unit economics from one-time closures, restructuring, impairment or accounting effects.
Build a valuation comparison on aligned inputs
Define P/E before you compare it
The SEC’s Investor.gov explains P/E as current stock price divided by earnings per share and describes it as a way to compare a company with its own past or with other companies. See the SEC P/E Ratio explanation.
For every P/E in your table, record:
- The exact share-price date and trading session close or other stated price.
- Trailing-12-month, fiscal-year or forward earnings.
- GAAP diluted EPS or an adjusted EPS definition.
- Whether discontinued operations, impairment, restructuring or other unusual items affect earnings.
- The share count used for diluted EPS.
A trailing P/E based on a depressed year can look high even if the business is recovering; a forward P/E can look low if the estimate assumes an aggressive rebound. A lower multiple alone does not establish that a stock is undervalued.
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Add a second lens when the business mix warrants it
Analysts may pair P/E with enterprise value to EBITDA or price to sales, provided each ratio is defined consistently. Enterprise value requires a consistent treatment of debt, cash and lease obligations; EBITDA requires a consistent treatment of interest, taxes, depreciation and adjustments. Price-to-sales is especially sensitive to franchise mix because franchise royalties and company-operated meal sales flow through reported revenue differently.
| Multiple | Numerator | Denominator to keep consistent | Main caution |
|---|---|---|---|
| P/E | Share price or equity value | Trailing or forward GAAP or adjusted EPS | Distorted by unusual earnings, leverage and differing growth |
| EV/EBITDA | Enterprise value, with debt, cash and lease policy stated | Same-period EBITDA definition and adjustments | Lease treatment and add-backs can change comparability |
| Price-to-sales | Equity value | Same-period reported revenue | Franchise and company-operated revenue recognition differ |
Align the dates and earnings periods
Market prices move every session while filings arrive quarterly or annually. Use one valuation date for every company and the same earnings period, or clearly label why a forward estimate is being used. Do not combine one company’s current price with another’s old price or compare a trailing multiple with a forward multiple without marking the difference.
This analysis has no live stock prices, current multiples or “cheapest restaurant stock” conclusion. Refresh issuer filings, consensus estimates and market data on the publication date. Treat the SEC’s P/E explanation as a framework for describing the ratio, not as an investment conclusion.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.A repeatable restaurant-stock comparison workflow
- Set the comparison date. Write down the market-price date, fiscal year-end and filing or results-release date for every company.
- Copy each comparable-sales definition. Capture the opening-period threshold, temporary-closure treatment, geography, currency exclusions and company-owned or systemwide population.
- Record the headline comp and its components. Enter comparable sales, transactions or traffic, and average check. Mark any component the issuer does not disclose as “not stated.”
- Separate price and volume. Ask whether check growth came from menu pricing, product mix, premium items or fees, and whether transactions rose or fell.
- Choose a matching margin scope. Compare company-operated restaurant margins with comparable company-operated margins, or consolidated operating margins with consolidated operating margins. Keep the two analyses in separate columns.
- Map the cost drivers. Note food and packaging, labor, occupancy, promotion, delivery, closures and corporate costs, then label management’s explanations as attributed explanations.
- Measure business-model mix. Record franchised versus company-operated units, revenue streams, lease exposure and capital spending responsibilities.
- Calculate valuation consistently. Use the same price date, trailing or forward period, GAAP or adjusted earnings basis and share-count convention. Add EV/EBITDA or price-to-sales only when definitions are comparable.
- Stress-test the conclusion. Ask what happens if traffic remains weak, wage inflation persists, a promotional period ends, or an unusual charge reverses.
- Write the investment case in separate parts. State the demand signal, unit economics, balance-sheet and lease risks, and valuation assumption rather than collapsing them into one score.
A practical comparison table
Use a table that preserves definitions instead of reducing every company to three percentages. The entries below illustrate the level of detail supported by the fiscal-2025 evidence; “not stated” means the cited material does not establish a comparable value.
| Axis | McDonald’s | Chipotle |
|---|---|---|
| Comparable-sales eligibility | At least 13 months; temporarily closed restaurants included; currency translation and hyperinflationary-market sales excluded | Company-owned restaurants open at least 13 full calendar months |
| FY2025 comparable-sales result | Not stated in the cited material | Down 1.7% |
| Traffic/transactions | Definition identifies guest counts as a driver; FY2025 change not stated here | Down 2.9% |
| Average check | Definition identifies pricing and product mix as influences; FY2025 change not stated here | Up 1.2% |
| Digital mix | Not stated in the cited material | 36.7% of total food-and-beverage revenue in FY2025 |
| Consolidated operating margin | 46.1% in 2025 versus 45.2% in 2024 | Not stated in the cited material |
| Franchise margin mix | Franchised restaurant margins were approximately 90% of restaurant margin dollars in 2025 | Not stated in the cited material |
| Valuation | No live price or multiple supplied | No live price or multiple supplied |
Do not interpret the table as a performance ranking. Its purpose is to prevent unlike definitions and scopes from being presented as if they were equivalent.
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Calling a positive comp “demand growth”
Correction: show transactions and check separately. If check rises because of pricing while traffic falls, describe the result as price or mix-supported sales, not unqualified customer growth.
Comparing a franchisor’s margin with a store operator’s margin
Correction: identify the numerator and denominator, then match restaurant-level with restaurant-level or consolidated with consolidated. Show franchise mix beside the percentage.
Treating reported revenue as system sales
Correction: determine whether the company reports only royalties and rent from franchised restaurants or the franchisee’s entire customer sales. Systemwide sales and company revenue are different measures.
Using a stale or mismatched P/E
Correction: put the price date, earnings period and GAAP/adjusted label in the table header. Recalculate when prices or estimates change.
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Ignoring leases and capital intensity
Correction: review lease obligations, remodel requirements, new-unit spending and who bears those costs. A high accounting margin can coexist with substantial fixed commitments.
Promoting one company’s figure to an industry benchmark
Correction: identify the publisher and fiscal year for every statistic. The Chipotle figures above are company-reported FY2025 results, not a restaurant-industry benchmark.
How to keep the comparison current
At each quarterly or annual update, replace the old comparable-sales definition only if the issuer changed it; otherwise preserve the prior definition and flag any change. Update the traffic/check split, restaurant openings and closures, franchise mix, restaurant-level and consolidated margins, lease and debt balances, and valuation inputs together. A valuation table without a matching operating-period update can create a false sense of precision.
For primary data, use company annual reports and results releases filed with regulators, then consult the SEC’s Stocks FAQs, which explains that EDGAR and company filings provide public information such as definitions, financial statements and management’s explanations. Keep a dated copy of every input so another reader can reproduce the comparison.
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Decision checklist
- Are the comparable-sales populations and 13-month rules actually the same?
- Did traffic rise, fall or remain undisclosed, and what drove average check?
- Are the margins restaurant-level or consolidated, and do the numerator and denominator match?
- How much of the business is franchised, and who carries labor, food, lease and capital costs?
- Are margin changes explained by recurring operations or unusual items?
- Do all valuation multiples use the same price date, earnings period and accounting basis?
- Does the valuation still make sense if growth, margins or traffic differ from the base case?
- Have you refreshed the filings and market data since the last comparison?
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