The end of the earnings season is always a good time to take a step back and see who shined (and who not so much). Let’s take a look at how modern fast food stocks fared in Q2, starting with Potbelly (NASDAQ:PBPB).
Modern fast food is a relatively newer category representing a middle ground between traditional fast food and sit-down restaurants. These establishments feature an expanded menu selection priced above traditional fast food options, often incorporating fresher and cleaner ingredients to serve customers prioritizing quality. These eateries are capitalizing on the perception that your drive-through burger and fries joint is detrimental to your health because of inferior ingredients.
The 8 modern fast food stocks we track reported a slower Q2. As a group, revenues missed analysts’ consensus estimates by 1.5%.
Amidst this news, share prices of the companies have had a rough stretch. On average, they are down 17.4% since the latest earnings results.
Potbelly (NASDAQ:PBPB)
With a unique origin story where the company actually started as an antique shop, Potbelly (NASDAQ:PBPB) today is a chain known for its toasty sandwiches.
Potbelly reported revenues of $123.7 million, up 3.4% year on year. This print exceeded analysts’ expectations by 0.9%. Overall, it was a strong quarter for the company with a solid beat of analysts’ EBITDA estimates and full-year EBITDA guidance topping analysts’ expectations.
Bob Wright, President and Chief Executive Officer of the Company, commented, “We are thrilled with our strong second quarter performance. From continued top-line momentum that includes positive traffic and new unit growth for the quarter that was ahead of our expectations, to year-over-year shop-level margin expansion and adjusted EBITDA near the high-end of our quarterly guidance range, our results truly reflect the growth engine we’ve been building over the past five years by leveraging our Five-Pillar Operating Strategy. As we look ahead, our focus remains on actions that will continue to drive accelerated growth through menu innovation, investments in our consumer-facing digital assets, growing and modernizing our shop footprint, and exercising prudent cost controls to achieve balanced growth while pushing incremental flow-through to our corporate earnings. The future is bright for Potbelly and we believe we are well positioned to capitalize on the immense opportunity ahead of us.”
Interestingly, the stock is up 47.4% since reporting and currently trades at $16.99.
Is now the time to buy Potbelly? Access our full analysis of the earnings results here, it’s free.
Best Q2: Shake Shack (NYSE:SHAK)
Started as a hot dog cart in New York City's Madison Square Park, Shake Shack (NYSE:SHAK) is a fast-food restaurant known for its burgers and milkshakes.
Shake Shack reported revenues of $356.5 million, up 12.6% year on year, outperforming analysts’ expectations by 0.9%. The business had a strong quarter with an impressive beat of analysts’ EBITDA estimates and a beat of analysts’ EPS estimates.
Shake Shack achieved the biggest analyst estimates beat among its peers. Although it had a fine quarter compared to its peers, the market seems unhappy with the results as the stock is down 27.9% since reporting. It currently trades at $101.66.
Is now the time to buy Shake Shack? Access our full analysis of the earnings results here, it’s free.
Weakest Q2: Noodles (NASDAQ:NDLS)
Offering pasta, mac and cheese, pad thai, and more, Noodles & Company (NASDAQ:NDLS) is a casual restaurant chain that serves all manner of noodles from around the world.
Noodles reported revenues of $126.4 million, flat year on year, falling short of analysts’ expectations by 3.9%. It was a disappointing quarter as it posted full-year revenue guidance missing analysts’ expectations and a significant miss of analysts’ EBITDA estimates.
Noodles delivered the highest full-year guidance raise but had the weakest performance against analyst estimates and slowest revenue growth in the group. As expected, the stock is down 30.7% since the results and currently trades at $0.70.
Read our full analysis of Noodles’s results here.
Chipotle (NYSE:CMG)
Born from a desire to offer quick meals with fresh, flavorful ingredients, Chipotle (NYSE:CMG) is a fast-food chain known for its healthy, Mexican-inspired cuisine and customizable dishes.
Chipotle reported revenues of $3.06 billion, up 3% year on year. This print lagged analysts' expectations by 1.5%. It was a slower quarter as it also logged a slight miss of analysts’ same-store sales estimates.
The stock is down 26.8% since reporting and currently trades at $38.68.
Read our full, actionable report on Chipotle here, it’s free.
Portillo's (NASDAQ:PTLO)
Begun as a Chicago hot dog stand in 1963, Portillo’s (NASDAQ:PTLO) is a casual restaurant chain that serves Chicago-style hot dogs and beef sandwiches as well as fries and shakes.
Portillo's reported revenues of $188.5 million, up 3.6% year on year. This number came in 3.9% below analysts' expectations. Overall, it was a slower quarter as it also produced a slight miss of analysts’ same-store sales estimates.
The stock is down 34.9% since reporting and currently trades at $6.18.
Read our full, actionable report on Portillo's here, it’s free.
Market Update
In response to the Fed’s rate hikes in 2022 and 2023, inflation has been gradually trending down from its post-pandemic peak, trending closer to the Fed’s 2% target. Despite higher borrowing costs, the economy has avoided flashing recessionary signals. This is the much-desired soft landing that many investors hoped for. The recent rate cuts (0.5% in September and 0.25% in November 2024) have bolstered the stock market, making 2024 a strong year for equities. Donald Trump’s presidential win in November sparked additional market gains, sending indices to record highs in the days following his victory. However, debates continue over possible tariffs and corporate tax adjustments, raising questions about economic stability in 2025.
Want to invest in winners with rock-solid fundamentals? Check out our 9 Best Market-Beating Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.
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