DA Davidson has initiated coverage of 14 U.S. restaurant companies, predicting a rebound in 2026 as valuations near three-year lows and early signs of improvement emerge. Analysts led by Matt Curtis cite rebounding consumer sentiment since November, particularly among younger and lower-income diners who cut back most last year.

Proprietary survey data shows more consumers plan to use restaurants this year than fewer, while easing commodity prices and predictable labor costs should improve bottom-line visibility. DA Davidson expects broad-based margin expansion to resume in the second half of 2026. Menu price reductions at many chains should boost traffic, and initial guidance appears achievable.

The firm's top picks include Shake Shack with a $51 price target, driven by initiatives including a doubling of limited-time offerings. Wingstop and Shake Shack 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.