NEW YORK (TheStreet) -- Everyone has to eat. Where they do so when they eat out could have an impact on your portfolio.

The food-service industry, which spans everything from fine dining like Del Frisco's ( DFRG) to quick-service meals like McDonald's ( MCD) to coffee shops like Starbucks ( SBUX) , employs more than 12 million people, making it America's second largest employer after the U.S. government.

With the rise in two-income households, restaurant sales have been growing, however "despite its growth rate, the industry should be seen as mature," according to TheStreet Ratings. "Companies within the industry generally earn thin margins and face stiff competition. As a result, M&A activity is frequent as competitors look to spread fixed costs across more locations."

Still there are some good investments in the restaurant sector. Using TheStreet Ratings, TheStreet's proprietary stock rating tool, we found the best restaurants to bite into in 2015.

TheStreet Ratings projects a stock's total return potential over a 12-month period including both price appreciation and dividends. Based on 32 major data points, TheStreet Ratings uses a quantitative approach to rating over 4,300 stocks to predict return potential for the next year. The model is both objective, using elements such as volatility of past operating revenues, financial strength, and company cash flows, and subjective, including expected equities market returns, future interest rates, implied industry outlook and forecasted company earnings.

Buying an S&P 500 stock that TheStreet Ratings rated a "buy" yielded a 16.56% return in 2014 beating the S&P 500 Total Return Index by 304 basis points. Buying a Russell 2000 stock that TheStreet Ratings rated a "buy" yielded a 9.5% return in 2014, beating the Russell 2000 index, including dividends reinvested, by 460 basis points last year.

The 11 stocks on the list all have a "buy" rating, with an A- or better grade from TheStreet Ratings. Click through to see which restaurant stocks made the list.

11. Buffalo Wild Wings (BWLD)
Rating: Buy, A-

2014 Return: 23.4%
YTD Return: 7%

Buffalo Wild Wings, Inc. owns, operates, and franchises restaurants primarily in the United States. It offers chicken and various food and beverage items, as well as serves bottled beers, wines, and liquor.

"We rate BUFFALO WILD WINGS INC (BWLD) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its robust revenue growth, solid stock price performance, impressive record of earnings per share growth, compelling growth in net income and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company shows low profit margins."

You can view the full analysis from the report here: BWLD Ratings Report

10. Cheesecake Factory (CAKE)
Rating: Buy, A-

2014 Return: 3.5%
YTD Return: 6.7%

The Cheesecake Factory Incorporated owns and operates casual dining and full-service restaurants.

"We rate CHEESECAKE FACTORY INC (CAKE) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, reasonable valuation levels, largely solid financial position with reasonable debt levels by most measures, notable return on equity and solid stock price performance. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

You can view the full analysis from the report here: CAKE Ratings Report

 

9. Popeye's Louisiana Kitchen (PLKI)
Rating: Buy, A-

2014 Return: 48%
YTD Return: 2.6%

Popeyes Louisiana Kitchen, Inc. develops, operates, and franchises quick-service restaurants. The company operates in two business segments, Franchise Operations and Company-Operated Restaurants.

"We rate POPEYES LOUISIANA KITCHEN (PLKI) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, growth in earnings per share, good cash flow from operations and increase in net income. We feel these strengths outweigh the fact that the company is trading at a premium valuation based on our review of its current price compared to such things as earnings and book value."

You can view the full analysis from the report here: PLKI Ratings Report

8. Papa John's International (PZZA)
Rating: Buy, A-

2014 Return: 24%
YTD Return: 12.7%

Papa John's International, Inc. operates and franchises pizza delivery and carryout restaurants under the Papa John's trademark worldwide. The company also operates dine-in and delivery restaurants in certain international markets.

"We rate PAPA JOHNS INTERNATIONAL INC (PZZA) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, growth in earnings per share, increase in net income and good cash flow from operations. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated."

You can view the full analysis from the report here: PZZA Ratings Report

7. Red Robin Gourmet Burgers (RRGB)
Rating: Buy, A-

2014 Return: 2.4%
YTD Return: 2%

Red Robin Gourmet Burgers, Inc., together with its subsidiaries, develops, operates, and franchises casual-dining restaurants in the United States and Canada.

"We rate RED ROBIN GOURMET BURGERS (RRGB) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, growth in earnings per share, increase in net income and good cash flow from operations. We feel these strengths outweigh the fact that the company shows low profit margins."

You can view the full analysis from the report here: RRGB Ratings Report

6. Flanigans Enterprises (BDL)
Rating: Buy, A

2014 Return: 109%
YTD Return: -18%

Flanigan's Enterprises, Inc. operates a chain of full-service restaurants and package liquor stores in South Florida.

"We rate FLANIGANS ENTERPRISES INC (BDL) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, impressive record of earnings per share growth, compelling growth in net income and attractive valuation levels. We feel these strengths outweigh the fact that the company shows low profit margins."

You can view the full analysis from the report here: BDL Ratings Report

5. Nathan's Famous Inc. (NATH)
Rating: Buy, A

2014 Return: 57.4%
YTD Return: -3%

Nathan's Famous, Inc., together with its subsidiaries, operates in the foodservice industry in the United States and internationally. It markets Nathan's Famous brand; and sells products bearing the Nathan's Famous trademarks through various channels of distribution.

"We rate NATHAN'S FAMOUS INC (NATH) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its robust revenue growth, solid stock price performance, impressive record of earnings per share growth and compelling growth in net income. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results."

You can view the full analysis from the report here: NATH Ratings Report

4. Ark Restaurants (ARKR)
Rating: Buy, A+

2014 Return: 0.27%
YTD Return: 8.3%

Ark Restaurants Corp., through its subsidiaries, owns and operates restaurants and bars in the United States.

"We rate ARK RESTAURANTS CORP (ARKR) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, increase in stock price during the past year, compelling growth in net income, attractive valuation levels and impressive record of earnings per share growth. We feel these strengths outweigh the fact that the company shows weak operating cash flow."

You can view the full analysis from the report here: ARKR Ratings Report

3. Cracker Barrel Old Country Store (CBRL)
Rating: Buy, A+

2014 Return: 26.5%
YTD Return: -4%

Cracker Barrel Old Country Store, Inc. develops and operates the Cracker Barrel Old Country Store concept in the United States. The company's Cracker Barrel stores consist of a restaurant with a gift shop. Its restaurants provide breakfast, lunch, and dinner.

"We rate CRACKER BARREL OLD CTRY STOR (CBRL) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, growth in earnings per share, increase in net income and reasonable valuation levels. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results."

You can view the full analysis from the report here: CBRL Ratings Report

2. Starbucks Corp. (SBUX)
Rating: Buy, A+

2014 Return: 4.4%
YTD Return: 8.5%

Starbucks Corporation operates as a roaster, marketer, and retailer of specialty coffee worldwide. The company operates in four segments: Americas; Europe, Middle East, and Africa; China/Asia Pacific; and Channel Development.

"We rate STARBUCKS CORP (SBUX) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, impressive record of earnings per share growth, compelling growth in net income and good cash flow from operations. We feel these strengths outweigh the fact that the company shows low profit margins."

You can view the full analysis from the report here: SBUX Ratings Report

1. Texas Roadhouse (TXRH)
Rating: Buy, A+

2014 Return: 21.4%
YTD Return: 2.9%

Texas Roadhouse, Inc., together with its subsidiaries, operates a full-service casual dining restaurant chain. The company operates its restaurants primarily under the Texas Roadhouse name, as well as sells franchises its restaurants.

"We rate TEXAS ROADHOUSE INC (TXRH) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, growth in earnings per share, reasonable valuation levels and good cash flow from operations. We feel these strengths outweigh the fact that the company shows low profit margins."

You can view the full analysis from the report here: TXRH Ratings Report

 

 

 

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