Best Restaurant Stocks to Buy: Starbucks vs. McDonald's vs. Domino's | SBUX vs. MCD vs. DPZ

Parkev Tatevosian, CFA•Jul 25, 2026

Summary

Parkev examines the restaurant industry, noting that while sector-wide challenges have depressed share prices, certain companies remain fundamentally strong for long-term investors. Parkev focuses on comparing the business models, financial metrics, and valuations of McDonald's, Domino's, and Starbucks. A key distinction Parkev highlights is the mix of franchisee versus corporate-owned locations, noting that McDonald's and Domino's utilize a highly franchised, capital-light model (90-95% franchised), whereas Starbucks owns approximately 40-50% of its locations, leading to higher capital intensity.

Parkev analyzes profit margins and efficiency, pointing out that McDonald's leads with a 46% operating margin, while Starbucks has struggled with declining margins and diseconomies of scale. In terms of valuation, Parkev finds Starbucks to be the most expensive at a forward P/E of 38.3, followed by McDonald's at 18.72 and Domino's at 15.65. Parkev concludes that McDonald's is the strongest buy due to its profitability and the way third-party delivery apps have expanded its reach, whereas those same apps have increased competition for Domino's.

McDonald's (MCD): Parkev identifies McDonald's as the best stock to buy right now among the three. Parkev highlights its industry-leading 46% operating profit margin and notes that food delivery networks have expanded the geographic reach of its locations. Parkev also finds the forward P/E of 18.72 to be an attractive entry point compared to Starbucks.

Domino's (DPZ): Parkev ranks Domino's as the second-best option, praising its asset-light business model and high 51% return on invested capital. However, Parkev notes that Domino's faces increasing competition because delivery networks now allow almost any restaurant to offer delivery, eroding Domino's historical advantage. Parkev observes a forward P/E of 15.65.

Starbucks (SBUX): Parkev ranks Starbucks as the least preferred option of the three due to its high valuation and operational struggles. Parkev points out that Starbucks is the most expensive at a forward P/E of 38.3 and has seen declining operating margins since 2017. While Parkev acknowledges the market's optimism regarding new CEO Brian Niccol, Parkev remains concerned about the company's ability to manage its current scale.

Mentioned Stocks

MCD

Sentiment: BUYAction: RECOMMENDED

Reasoning: Parkev selects McDonald's as the top pick because of its exceptional 46% operating profit margin, which has improved over the last decade. Parkev explains that third-party delivery apps have benefited McDonald's by expanding each location's geographic reach. Parkev considers the forward P/E ratio of 18.72 to be a reasonable valuation for its market position.

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DPZ

Sentiment: BUYAction: RECOMMENDED

Reasoning: Parkev ranks Domino's second, noting its asset-light model yields a superior return on invested capital of 51%. Parkev likes the stock but cautions that the rise of food delivery aggregators has increased competition for its core delivery business. Parkev notes it has the lowest valuation of the three with a forward P/E of 15.65.

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SBUX

Sentiment: HOLD

Reasoning: Parkev ranks Starbucks third and expresses concern over its forward P/E of 38.3, which is significantly higher than its peers. Parkev points to declining operating margins since 2017 and suggests the company is facing diseconomies of scale. Despite the positive news of a new CEO, Parkev believes the stock's current performance and price make it less attractive than McDonald's or Domino's.

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