Restaurants Industry: Restaurants Weekly: Mixed menu

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Restaurants Industry

Restaurants Weekly: Mixed menu

Price Objective Change

Embracing earnings

2Q earnings season is picking up speed, with Wingstop, Starbucks, Chipotle, and Yum!

Brands reporting this past week. The stocks traded higher on earnings, though moves

varied in magnitude and duration. The reactions are consistent with many restaurant

stocks sitting at historically low valuations even as demand appears to have improved.

01 August 2026

Equity

United States

Restaurants

Unwrapping CMG momentum

Headed into 2Q, CMG struck us as the vanishingly rare stock for which valuation was

low, but fundamentals were improving. The opportunity was in the overhang from the

Cyclospora outbreak and the media’s tendency to lump it and other large chains in with

Taco Bell (a topic we addressed). While Cyclospora has dampened CMG traffic by about

200 bps, underlying momentum is strengthening and CMG has a full slate of innovation

and promotions ahead, as well as loyalty integration with digital wallets. Although the

stock’s response to earnings lifted valuation slightly, it remains low vs history and vs

other restaurants, and the brand’s suggests more positive revisions to come.

Recovery reservations

SBUX and YUM fit a different mold. Both traded at average to above-average valuations

and had a more constructive bent among long-only clients we spoke to. After YUM’s selloff on news of the Cyclospora outbreak identified with Taco Bell, we received inbound

calls from investors looking to buy on weakness. We were concerned that demand

recovery was unpredictable and it might be too early to buy, but the market

disagreed. The response to both reports was muted, though SBUX bears were more

vocal. Investors voiced concerns about the sustainability of both SSSG — given the

2+ ppt benefit to transactions from sales transfer and store closures, and 1+ ppt to

ticket from delivery — and margin expansion.

WING(back)Stop

And then there was WING, whose valuation we view as the most compelling in our

coverage. WING’s 17.5x EV/EBITDA multiple is nearly identical to YUM’s 17.3x. In 2Q,

WING posted 5.3% systemwide sales growth, 18 ppt below its 2022-2025 average but

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