As the Q2 earnings season wraps, let’s dig into this quarter’s best and worst performers in the modern fast food industry, including Wingstop (NASDAQ: WING) and its peers.
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 7 modern fast food stocks we track reported a slower Q2. As a group, revenues missed analysts’ consensus estimates by 1.2%.
Amidst this news, share prices of the companies have had a rough stretch. On average, they are down 12.5% since the latest earnings results.
Wingstop (NASDAQ: WING)
The passion project of two chicken wing aficionados in Texas, Wingstop (NASDAQ: WING) is a popular fast-food chain known for its flavorful and crispy chicken wings offered in a variety of sauces and seasonings.
Wingstop reported revenues of $174.3 million, up 12% year on year. This print exceeded analysts’ expectations by 0.5%. Overall, it was a satisfactory quarter for the company with an impressive beat of analysts’ same-store sales estimates but a significant miss of analysts’ EBITDA estimates.
"Our second quarter results showcase the strength of our unit economics and returns our brand partners are seeing for their businesses," said Michael Skipworth, President & Chief Executive Officer.
Interestingly, the stock is up 16% since reporting and currently trades at $337.44.
Is now the time to buy Wingstop? 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 a solid 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 its peers, the market seems unhappy with the results as the stock is down 23.9% since reporting. It currently trades at $107.28.
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 significantly 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 25.7% since the results and currently trades at $0.75.
Read our full analysis of Noodles’s results here.
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 result topped analysts’ expectations by 0.9%. Overall, it was a strong quarter as it also put up an impressive beat of analysts’ EBITDA estimates and full-year EBITDA guidance topping analysts’ expectations.
The stock is up 7.5% since reporting and currently trades at $12.40.
Read our full, actionable report on Potbelly here, it’s free.
Sweetgreen (NYSE: SG)
Founded in 2007 by three Georgetown University alum, Sweetgreen (NYSE: SG) is a casual quick service chain known for its healthy salads and bowls.
Sweetgreen reported revenues of $185.6 million, flat year on year. This print lagged analysts' expectations by 3.3%. It was a disappointing quarter as it also produced full-year revenue guidance missing analysts’ expectations significantly and full-year EBITDA guidance missing analysts’ expectations significantly.
Sweetgreen had the weakest full-year guidance update among its peers. The stock is down 27.2% since reporting and currently trades at $9.20.
Read our full, actionable report on Sweetgreen here, it’s free.
Market Update
Thanks to the Fed’s rate hikes in 2022 and 2023, inflation has been on a steady path downward, easing back toward that 2% sweet spot. Fortunately (miraculously to some), all this tightening didn’t send the economy tumbling into a recession, so here we are, cautiously celebrating a soft landing. The cherry on top? Recent rate cuts (half a point in September 2024, a quarter in November) have propped up markets, especially after Trump’s November win lit a fire under major indices and sent them to all-time highs. However, there’s still plenty to ponder — tariffs, corporate tax cuts, and what 2025 might hold for the economy.
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