Restaurants are focusing increasingly on digitizing their operations and offering contactless delivery services to meet the challenges of rising COVID-19 cases. Also, booster vaccine shots and rising consumer spending are among the factors that should help Papa John's (PZZA) and Shake Shack (SHAK) endure. But which of these stocks is a better buy now? Let’s find out.Papa John's International, Inc. (NASDAQ:PZZA) in Louisville, Ky., and New York City’s Shake Shack Inc . (NYSE:SHAK) are well-known restaurant operators. PZZA operates and franchises pizza delivery, dine-in, and carry-out restaurants under Papa John's trademark. As of June 29, 2021, it operated 5,400 Papa John's restaurants. In comparison, SHAK operates as a fast-casual restaurant that offers food and beverages. As of December 30, 2020, it operated 311 Shake Shacks.
With the resurgence of COVID-19 cases, the restaurant industry is focusing more urgently on digitizing operations and strengthening contactless delivery services to maintain sales. This, along with a strong vaccination drive, should help the industry stay afloat in the near term. The U.S. restaurant industry is expected to grow at a 4% CAGR to $514.13 billion by 2027. So, both PZZA and SHAK should benefit.
But while SHAK’s shares have declined 26.1% in price over the past six months, PZZA has surged 54.3%. And PZZA is a clear winner with 9.1% price gains versus SHAK’s negative returns in terms of their past month’s performance. But which of these stocks is a better pick now? Let’s find out.