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Investors Remain Cautious Amid 'Still-Sluggish' Restaurant Industry Demand, UBS Says
US Markets

Investors Remain Cautious Amid 'Still-Sluggish' Restaurant Industry Demand, UBS Says

The US restaurant industry largely continues to face a "still-sluggish" demand, with the macro backdrop posing risks and offering limited visibility into the outlook, UBS Securities said Monday.Industry growth improved last month sequentially amid stronger fast casual trends, though restaurants' share of wallet and "share of stomach" both dropped "modestly," UBS analysts, including Dennis Geiger, said in a note to clients."Our meetings and investor discussions last week continued to highlight more cautious sector sentiment, reflecting broadly still-sluggish industry demand and macro conditions creating risk and limited visibility into outlook," Geiger wrote.Investor concerns are even greater toward quick-service restaurants, or QSRs, which generate a substantial portion of their revenue from low-income consumers and face more significant macro risks, according to the note."While many investors highlighted potential opportunities from valuation pressures across much of the sector and a potentially oversold group, conviction appears limited," Geiger said.In the QSR segment, sales and traffic improved in April compared to the month prior, UBS said, citing industry data."Our latest QSR franchisee discussions continue to highlight performance bifurcation among brands, with gas prices and broader macro challenges negatively impacting visits/spend for many brands," Geiger said. However, certain brands such as Taco Bell of Yum Brands (YUM) and Burger King of Restaurant Brands International (QSR) "appear to maintain significant momentum."Consumer confidence improved across all income groups this month, UBS said, citing its latest survey. "Encouragingly, consumers reported a greater willingness to spend overall, including on dining out," Geiger said."We anticipate underlying restaurant demand and share of wallet trends should be largely consistent through (2026) driven by fiscal stimulus benefits, value efforts, menu innovation, and other initiatives, with potential risks from elevated gas prices and other factors that could pressure consumer sentiment," Geiger said.Price: $152.22, Change: $+2.25, Percent Change: +1.50%

$QSR$YUM
US Markets

Shake Shack Stock Plunges as Inclement Weather Hurts First-Quarter Performance

Shake Shack (SHAK) shares plummeted Thursday after the fast food chain operator's first-quarter results fell short of Wall Street's estimates amid weather-related headwinds.The company broke even in terms of non-GAAP earnings per share, compared with $0.14 adjusted EPS a year earlier and the FactSet-polled consensus that called for $0.12 in EPS. Revenue grew 14% to $366.7 million, while same-store sales rose 4.6%.Analysts expected revenue of $372.4 million and 4.7% in comparable sales growth in the quarter ended April 1.Inclement weather weighed down comparable sales by 240 basis points and impacted adjusted earnings before interest, taxes, depreciation and amortization in the first quarter, Chief Executive Rob Lynch said in a statement.The company's shares plunged about 30% intraday Thursday.Restaurant level margins slightly missed the company's own expectations amid higher operating expenses and "some mix impact" of marketing initiatives," the company said in a shareholder letter.For 2026, Shake Shack maintained its revenue guidance of $1.6 billion to $1.7 billion, continuing to expect same-store sales to grow by a low single-digit percentage. Analysts in a FactSet poll are projecting sales of $1.66 billion and same-store sales growth of 3%."Our sales momentum is building in (the second quarter) and that we are reiterating our 2026 guidance for same Shack sales restaurant level margins and our long-term financial targets," Lynch said on an earnings conference call, according to a FactSet transcript.Shake Shack appointed Michelle Hook as its chief financial officer, effective May 11. Hook previously served as CFO of Portillo's (PTLO).Katherine Fogertey stepped down as Shake Shack CFO in March.Fast-food giant McDonald's (MCD) logged first-quarter results above the Street's views on Thursday, a day after Burger King parent Restaurant Brands International (QSR) posted stronger-than-expected financials.Last week, Yum Brands (YUM) reported first-quarter comparable sales growth at KFC and Taco Bell.Price: $69.55, Change: $-26.97, Percent Change: -27.94%

$MCD$PTLO$QSR$SHAK$YUM
Sectors

Sector Update: Consumer Stocks Rise Late Afternoon

Consumer stocks were higher late Wednesday afternoon, with the State Street Consumer Staples Select Sector SPDR ETF (XLP) up 0.3% and the State Street Consumer Discretionary Select Sector SPDR ETF (XLY) rising 1.8%.In corporate news, Uber (UBER) on Wednesday issued a bookings growth outlook that surpassed Wall Street's estimates, while the ride-hailing company's Q1 profit grew year-on-year. Uber shares popped 9.5%.Walt Disney's (DIS) fiscal Q2 results came in ahead of market estimates amid revenue gains across all business operations, while the media and entertainment giant reiterated its expectations for growth to accelerate in H2. Its shares climbed past 7%.Sony Group's (SONY) Sony Music is nearing a deal to acquire a music catalog including works by artists such as Justin Bieber and Neil Young from Blackstone (BX), Bloomberg reported. Sony is in discussions to acquire Recognition Music through a joint venture with Singaporean sovereign wealth fund GIC, which will pay from $3.5 billion to $4 billion, the report said. Sony Group shares added 3%.Restaurant Brands International's (QSR) Q1 earnings and revenue topped Wall Street's estimates Wednesday, while the restaurant operator's comparable sales growth was in line with consensus. Its shares were down 5%.

$DIS$QSR$SONY$UBER
Sectors

Sector Update: Consumer

Consumer stocks were higher late Wednesday afternoon, with the State Street Consumer Staples Select Sector SPDR ETF (XLP) up 0.4% and the State Street Consumer Discretionary Select Sector SPDR ETF (XLY) rising 1.9%.In corporate news, Restaurant Brands International's (QSR) Q1 earnings and revenue topped Wall Street's estimates Wednesday, while the restaurant operator's comparable sales growth was in line with consensus. Its shares were down 5.9%.

$QSR
Research

Research Alert: CFRA Maintains Hold Opinion On Shares Of Restaurant Brands International Inc.

CFRA, an independent research provider, has providedwith the following research alert. Analysts at CFRA have summarized their opinion as follows:We lower our 12-month target by CAD2 to CAD112, based on 20x our 2026 EPS estimate (down from 21x), a discount to shares' 22x 10-year average forward multiple. We raise our 2026 EPS to USD4.06 (CAD5.60) from USD4.05 and 2027's to USD4.32 (CAD5.96) from USD4.29. Following Q1 results showing comp growth momentum at Burger King (+5.8%) but also pressure from beef costs (supply chain cost of sales +13.7%) and ongoing comp drag at Popeyes (-6.5%), we are reiterating our Hold opinion. The company starts 2026 with comp growth (+3.2%) operating income growth (+13%) on pace to exceed their long-term growth targets of +3% and +8%. We are encouraged by Burger King's comp growth momentum, suggesting a turnaround is gaining traction. However, this is balanced by cost pressure from beef prices. Additionally, Q1 restaurant growth (-56 Q/Q) leaves work to be done although management expects this to accelerate throughout the year. Still, we view shares' reaction today suggests investors sense elevated execution risks.

$QSR
US Markets

Burger King Parent Restaurant Brands' First-Quarter Earnings, Revenue Top Street Views

Restaurant Brands International's (QSR) first-quarter earnings and revenue topped Wall Street's estimates Wednesday, while the restaurant operator's comparable sales growth was in line with consensus.The Burger King parent's adjusted earnings rose to $0.86 a share in the quarter through March 31 from $0.75 a year earlier, while revenue climbed 7.4% to $2.26 billion. Those results surpassed the Street's projections for $0.83 and $2.24 billion, respectively. Comparable sales grew 3.2%, matching the Street's views. Net restaurant growth was 2.6% versus a 3.3% increase a year earlier.The company's shares were down 5.5% in afternoon trade. So far in 2026, the stock has gained roughly 13% in value.First-quarter comparable sales grew 1.6% at the Tim Hortons brand, 5.8% at Burger King, and 5.7% at the international segment. The Firehouse Subs saw a 0.5% drop, while Popeyes plunged 6.5%."Tim Hortons and international each delivered their 20th consecutive quarter of positive comparable sales," Chief Executive Josh Kobza said in a statement. "At Burger King, our results reflect several years of hard work by our franchisees and teams."Restaurant Brands is on course to repurchase roughly $500 million in shares for 2026, Chief Financial Officer Sami Siddiqui said on an earnings conference call, according to a FactSet transcript."We are closely monitoring beef costs and expect normalization over time, with relief now anticipated closer to 2027," Siddiqui told analysts.The company continues to expect comparable sales growth of more than 3% from 2024 to 2028 and reach net restaurant growth north of 5% towards the end of its algorithm period.Restaurant Brands is on track to deliver about 1,800 net new restaurants a year by 2028, Siddiqui said. "We are continuing to simplify the business and have a path to sunset Restaurant Holdings by the end of 2027."Price: $77.08, Change: $-4.59, Percent Change: -5.62%

$QSR
Research

Research Alert: Qsr: Q1 Beats Estimates; Burger King Us Gains Momentum

CFRA, an independent research provider, has providedwith the following research alert. Analysts at CFRA have summarized their opinion as follows:Consolidated system-wide sales grew 6.2% with comparable sales accelerating to 3.2%, while adjusted EPS of $0.86 increased 15% Y/Y, beating consensus of $0.83. Organic adjusted operating income growth of 10.7% positions the company ahead of its 8%+ full-year target. Burger King U.S. turnaround is accelerating with comps of +5.8% above the +3.3% consensus, validating the Reclaim the Flame investment as the key investable takeaway. Management resumed share repurchases with $940M remaining under authorization and a $500M full-year target. We believe sustained Burger King U.S. momentum would be the primary catalyst for multiple expansion, as this represents the clearest evidence the turnaround is working. International remains the growth engine with 11.1% system-wide sales growth and 20 consecutive quarters of positive comps. Popeyes U.S. remains a headwind with comps declining 6.5%, while Tim Hortons' margin compression despite revenue growth suggests reinvestment may be structural, bearing watching.

$QSR
US Markets

Stocks Rise Pre-Bell, Oil Prices Fall After Report Says US, Iran Nearing Peace Agreement

The main US stock measures were pointing higher in Wednesday's premarket activity, while oil prices declined after a media report said the US and Iran are nearing a potential agreement to end their conflict.The S&P 500 and the Dow Jones Industrial Average rose 0.7% each before the opening bell, while the Nasdaq advanced 1.2%. The indexes finished the previous trading session in the green, with the S&P 500 and the Nasdaq closing with new highs.Washington is nearing an agreement with Tehran on a one-page memorandum of understanding to end their conflict in the Middle East and establish a framework for more detailed nuclear negotiations, Axios reported Wednesday, citing two US officials and two other sources familiar with the matter.In a social media post on Tuesday, President Donald Trump said the US is temporarily pausing "Project Freedom," its effort to guide neutral ships locked up in the Strait of Hormuz out of the crucial waterway. Trump noted that the US blockade on Iranian ports will remain in effect.US Defense Secretary Pete Hegseth reportedly said Tuesday that the ceasefire agreement with Iran remained intact despite recently renewed tensions in the Gulf region.West Texas Intermediate crude oil dropped 9.3% to $92.88 a barrel in premarket action, while Brent fell 8.3% to $100.77.Treasury yields slipped before the open, with the two-year rate retreating 7.3 basis points to 3.87% and the 10-year rate off 6.8 basis points to 4.35%.Walt Disney (DIS), Uber Technologies (UBER), CVS Health (CVS), Marriott International (MAR), Johnson Controls International (JCI), Restaurant Brands International (QSR), Kraft Heinz (KHC) and Performance Food Group (PFGC) are some of the major companies scheduled to report their latest financial results before the bell, among others.Arm Holdings (ARM), Applovin (APP), DoorDash (DASH) and Warner Bros. Discovery (WBD) post earnings after the markets close.Shares of Advanced Micro Devices (AMD) jumped 18% pre-bell after the chipmaker reported stronger-than-expected first-quarter results. Novo Nordisk's (NVO) US-listed stock climbed 7.5% as the Danish pharmaceutical giant issued an improved full-year sales outlook. Arista Networks (ANET) declined 8.1% after it issued a downbeat second-quarter revenue outlook.Wednesday's economic calendar has the weekly mortgage applications bulletin at 7 am ET, followed by the ADP Employment report for April at 8:15 am. The weekly EIA domestic petroleum inventories report is out at 10:30 am.Federal Reserve Bank of St. Louis President Alberto Musalem is slated to speak at 9:30 am, while Chicago Fed President Austan Goolsbee speaks at 1 pm.Gold increased 3.1% to $4,710 per troy ounce, while bitcoin moved up 0.8% to $82,210.

Dow JonesNasdaq CompositeS&P 500$AMD$ANET$APP$ARM$CVS$DASH$DIS$JCI$KHC$MAR$NVO$PFGC$QSR$UBER$WBD
Wire

Restaurant Stocks Trail Market Amid Soft Demand, Early Q2 Volatility, BofA Says

Restaurant stocks are trailing the broader market as Q2 gets underway, with rising gasoline prices and softer demand weighing on the group, BofA Securities said Friday in a report.Same-store sales improved in Q1 despite adverse weather, while early April trends are difficult to interpret because Easter fell earlier this year, typically slowing restaurant traffic, the report said.Higher fuel costs are squeezing budgets and margins after investors had expected stronger spending helped by tax refunds, BofA said. Restaurants showing steady customer traffic and clear earnings momentum should stand out, the report said.In coverage of 19 companies, BofA cut its price target on Chipotle Mexican Grill (CMG) stock to $50 from $53, citing adjustments to its long-term earnings model tied to recent stock volatility. The company remains a strong brand with meaningful long-term earnings potential, the report said.BofA raised its price target on Starbucks (SBUX) stock to $130 from $120. The coffee chain is working to improve store operations and customer service, and these efforts could help stabilize results and support a recovery as the year progresses, the report said.BofA boosted its price target on Restaurant Brands International (QSR) stock to $74 from $63, pointing to improvements across its major chains. Better marketing and store upgrades, particularly at Burger King, may help drive steadier sales, the report said.Chipotle shares rose 0.5% in Friday trading, Starbucks fell 0.6%, and Restaurant Brands eased 0.1%.Price: $34.10, Change: $+0.20, Percent Change: +0.58%

$CMG$QSR$SBUX
Wire

BofA Adjusts Price Target on Restaurant Brands International to $74 From $63

Restaurant Brands International (QSR) has an average rating of overweight and mean price target of $82.89, according to analysts polled by FactSet.(covers equity, commodity and economic research from major banks and research firms in North America, Asia and Europe. Research providers may contact us here: https://www..com/contact-us)Price: $80.93, Change: $-0.30, Percent Change: -0.37%

$QSR
Wire

Restaurant Brands Seen Extending Q1 Momentum on Burger King, International Strength, RBC Says

Restaurant Brands International (QSR) is expected to extend its "positive momentum" into Q1, led by strength at Burger King and its international segment, while valuation leaves room for further upside, RBC Capital Markets said.The brokerage said in a Monday note that it expects the company to "beat" quarterly estimates and said risk/reward and investor sentiment remain positive. It cited improving fundamentals and a high-teens discount to mature global quick-service peers.Burger King is gaining traction as ongoing renovations, menu innovation and targeted marketing drive performance, with only about 58% of US locations modernized by the end of 2025.RBC said the brand is approaching a "critical mass" of renovated stores that is creating a positive halo effect on performance. International operations remain a standout, with broad-based strength across key European markets such as France, the UK, Spain and Germany.The firm flagged potential headwinds at Tim Hortons from slowing Canadian population growth, which could limit same-store sales upside in 2026. Popeyes is still undergoing an operational turnaround that may take multiple quarters before returning to positive same-store sales growth.RBC said it continues to view Restaurant Brands International as a "top idea" in the global franchised fast-food sector, with improving Burger King US trends, accelerating international growth and a shift toward growth-focused capital allocation expected to support the stock.The firm has an outperform rating on Restaurant Brands and raised its price target to $90 from $83.Price: $78.71, Change: $-0.20, Percent Change: -0.25%

$QSR
Research

Research Alert: CFRA Keeps Hold Opinion On Shares Of Restaurant Brands International Inc.

CFRA, an independent research provider, has providedwith the following research alert. Analysts at CFRA have summarized their opinion as follows:We raise our 12-month target by CAD15 to CAD114, based on 21x our 2026 EPS estimate (up from 18x), in line with the shares' 10-year average forward multiple. We raise our 2026 EPS to USD4.05 (CAD5.43) from USD4.00 and lower 2027's to USD4.29 (CAD5.75) from USD4.30. Our revised multiple reflects our view that QSR's franchised model offers better earnings resilience than company-operated formats in an environment of heightened margin headwinds. Our new estimates reflect potential acceleration of consumer trade-down toward value as higher gas prices may limit dining occasions or overall purchasing power. Our opinion remains Hold, as QSR is not immune to cost pressures, with adjusted operating margins falling 120 bps in 2025. We believe 2026 consensus estimates suggest expectations of margin expansion, with EPS growth estimates of 9.9% outpacing revenue growth of 4.3%, which may be at risk. Additionally, current valuation at historical averages leaves limited upside.

$QSR