Restaurant stocks are struggling to start 2026. Where to find buying opportunities
Restaurant stocks struggling this year as the industry weathers inflation , uneven economic growth and the proliferation of weight-loss drugs through society. The S & P 500 Hotels, Restaurants and Leisure industry is down around 4% this year. The broader benchmark index, meanwhile, is is down 1.8% for 2026. Delivery giant DoorDash has fallen more than 27% in that time, while Chipotle Mexican Grill is down nearly 12% for the year. Wendy’s has also languished, losing 15% year to date. To be sure, some names have bucked the trend. Darden Restaurants, which owns Olive Garden, is up 10% in 2026, while McDonald’s has climbed 6%. Cava has also bounced more than 40%. The volatility comes as consumers shift their food habits, with artificial intelligence leading to job cuts and GLP-1 drugs curbing spending. And there are signs the choppiness may continue. Citi analyst Jon Tower called 2026 a “‘wall of worry’ year” for the restaurant industry, creating “frustration” for investors. However, he expects “many opportunities” to arise from the choppiness. GLP-1 not hitting restaurant chains — yet Restaurant chains have yet to report major shifts in demand on growing GLP-1 adoption. That could soon change. A Cornell SC Johnson College of Business research paper found that households with at least one GLP-1 user saw an 8% short-term decline in food-away-from-home spending, habits that persist within the first year of GLP-1 use. Fast-food chains, coffee shops and limited-service spots comprise the food-away-from-home category. The decline remained consistent across income levels. Older and higher-income groups make up the largest share of GLP-1 users. However, as insurance coverage expands, prices fall and oral drugs become available, analysts expect GLP-1 drugs to become more accessible to consumers, including lower-income consumers. Bank of America analyst Sara Senatore wrote that “the wider appeal and lower costs of recently introduced pills could tilt the balance.” Greater availability would hit quick-service and fast-casual restaurants because their customer base tends to be lower income consumers, who are less likely to use GLP-1s. According to Senatore, rapid GLP-1 adoption threatens quick-service establishments the most, as they also rely on consumers to make impulse and snack purchases, habits Senatore thinks are “most likely to be affected” on GLP-1 use. Survey data from Citi also showed aggregate U.S. calorie consumption will continue to drop over the next 10 years as GLP-1 use rises. In response, quick-service and fast-casual spots have begun to introduce high protein options and more beverage offerings. McDonald’s and Wendy’s are experimenting with energy drinks, while Yum Brands -owned Taco Bell added more drinks to its menu. “If consumers are cutting back on calories, this is one way to get potentially lower calorie occasions, but still occasions, at restaurants,” Tower told CNBC. Though rising GLP-1 use rates pose threats to quick-service and fast-casual restaurants, full-service and casual dining businesses like Chili’s, owned by Brinker International, are less exposed to the GLP-1 narrative. Meals at these locations tend to contain more protein and cater to occasion-based experiences, rather than what Tower calls “calorie stops.” “We have a view that full service, which are sit down restaurants, those occasions, probably won’t be eaten away to the same extent that a calorie stop will be,” Tower added. Weaker jobs market and the ‘K-shaped’ economy A worsening labor market could add volatility to the restaurant space. Payrolls fell by 92,000 in February , the Bureau of Labor Statistics reported. Jobs also declined in Dec. and Oct. 2025. The unemployment rate also rose slightly to 4.4% in February from 4.3% the previous month. Fast-casual restaurants could feel the effects of a weaker job market the most. In fact, many chains in the category experienced stagnant or falling same-store sales. Sweetgreen , Wingstop and Chipotle are among the companies that reported low same-store, single-digit sales growth. Sweetgreen reported a 9.5% drop compared to the same period from the previous year, while Wingstop saw a decrease of 3.3% year over year. Chipotle noted a 2.5% drop from the previous quarter. In their note, Bank of America pointed to data that shows weak restaurant demand coincided with the weak labor market toward the last three months of 2025. Fast-casual and quick-service restaurants have the largest shares of young consumers against the other segments in the industry, per BofA. However, younger consumers are more sensitive to job market changes. Unemployment for new graduates sat at 5.8% in Sept. 2025, slightly greater than the overall unemployment rate of 4.1% at the time, the report said. BofA also said that wage growth year over year slows for people who changed jobs, which impacts younger generations most. “Because restaurant demand is highly correlated with payroll growth, last year’s weaker labor market … translated into demand weakness broadening beyond lower-income consumers,” Senatore wrote. Bank of America remains “cautiously optimistic” that the job market will improve in 2026. Analysts are also watching for the implications of “K-shaped” economic recovery on restaurant spending. Tower noted that the publicly traded companies Citi follows “have higher exposure to lower income guests,” putting these chains at a greater risk within growing economic disparity. However, fast-food chains are moving to capture the lower end of the K-shape. McDonald’s same-store sales got a boost by the company reintroducing its “Extra Value Meals” in September. Wendy’s also introduced its “Meal Deals” earlier this year, which includes the popular $6 “Biggie Bag.” Unlike fast-food chains, Senatore thinks that casual restaurants don’t have to provide deep discounts like fast-food chains to see growth by “highlighting inherent value.” Stocks to watch Citi’s Tower is bullish on McDonald’s, Chipotle, Cheesecake Factory, Darden Restaurants — which owns Olive Garden — and Brinker International , the conglomerate that operates Chili’s. He has a buy rating on all these stocks. For McDonald’s, Tower cites new beverages and menu items as potential growth drivers. Chipotle continues to commit to its made-from-scratch protein options, which caters to the U.S. protein craze. Tower believes Cheesecake Factory, a steady market share gainer, is trading “well-below fair value,” and set a price target of $65. This is 6% above Wednesday’s close. “Real value creation in the category over time has been driven by high returns unit growth coupled with fairly strong same-store sales growth, mostly driven by traffic,” Tower told CNBC. Better procurement, supply chain savings and shifting to a heavier franchise business model are also signs of potential gains, according to Tower, even the restaurant industry enters an uncertain landscape.
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