It's been a difficult year for restaurant stocks. McDonald's, Wingstop, Domino's Pizza, Yum! Brands, Wendy's, Cava Group, Dutch Bros., Shake Shack, and Papa John's International aren't just underperforming the broader market in 2026, they're well in the red.
?Restaurants are struggling with some of the same problems as packaged-food makers: Higher prices-ingredients and finished entrees-increased GLP-1 use, food-borne illness outbreaks, and greater interest in wellness. Yet food service companies are also dealing with upward pressure on labor costs and the need for innovation: You might be happy to buy the same PB&J products at the supermarket, but probably want more excitement when you go out.
There have been some success stories, of course. Starbucks and Burger King owner Restaurant Brands International are both up double digits. Barron's senior technical analyst Doug Busch says Chipotle Mexican Grill and multichain owner Darden Restaurants might also be attractive now. Chipotle, which has been roughly flat in 2026, has seen its 200-day simple moving average start to slope higher for the first time in more than a year. Darden, which has done well this year, showed excellent relative strength during this past Monday's selloff.
Winners aside, the industry will continue to have a tough run. Consumers will spend discretionary dollars elsewhere, and there are few signs that's changing anytime soon.
Write to Teresa Rivas at teresa.rivas@barrons.com
Last Week
Street life: The market showed signs of life on Thursday, thanks to the Federal Reserve doing its job in tackling inflation, AI stocks, and cheerier employment news. Then came Friday. Meh. For the week, the Dow and S&P 500 index were down 1.7% and 0.1%, respectively. The Nasdaq: up 0.7%.
Paul Volcker land: The Fed made its?move and raised rates a quarter of a point. The hope: Inflation-now at 3.4% for the latest 12-month period-will someday fall to 2%, the sacred goal. President Trump, apparently, raged at the Fed board-not his guy, Chairman Kevin Warsh.
I'm sorry, Dave, I'm afraid I can't do that: OpenAI's Sam Altman and xAI's Elon Musk joined Anthropic's CEO Dario Amodei in calling for a slowdown in AI development. AI allies-Nvidia's Jensen Huang and President Trump-pushed back. Microsoft is a fan of putting limits on its AI models, but not slowing things down. Pick a side and head to Polymarket.
You can't always get what you want: Crypto's top legislative priority failed after Democrats said it didn't go far enough to rein in President Trump's personal investments. Coinbase and Strategy are in mourning.
Oh, Canada: The European Union's proposal to make Canada its first "associate member" is heating up the trade spat with the U.S. For now, the EU's invitation is more symbolic than substantial. Or is it?
Next Week
Wednesday 9/23
S&P Global releases both its Manufacturing and Services Purchasing Managers' Indexes for September. Consensus estimates are for a reading of 53.6 for the Manufacturing PMI and 56 for the Services PMI. Both readings are roughly a half-point less?than the August data.
Thursday 9/24
President Donald Trump and his Chinese counterpart, Xi Jinping, are scheduled to hold talks at the White House. Topics expected to be discussed include tariffs, trade agreements, the Iran war, Taiwan, and artificial-intelligence safety. The leaders of the world's two largest economies met in Beijing in?May, and have so far agreed to pause further trade war escalation.
The Census Bureau reports new-home sales for August. Economists forecast a seasonally adjusted annual rate of 616,00 new single-family homes sold, slightly more than in July.
Friday 9/25
The Census Bureau releases the durable goods report for August. The consensus call is for a 0.3% decline in new orders for manufactured durable goods, after a 1.1% increase in July. Excluding transportation, new orders are expected to rise 0.6%, two-tenths of a percentage point more than previously.
The Numbers
13%
Increase in the value of shopping malls over the past year, topping all 10?commercial property sectors.
$2 T
Volume of Treasury bonds held by hedge funds, more than double the level of five years earlier.
48%
Americans with a "very or somewhat positive view" of the computer industry, down 11 points in the past year.
$2,520
The likely household heating bill this winter for the average home using oil, up from $1,749 last winter.
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