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Senior Reporter Brooke DiPalma joins Market Domination to discuss how franchise operators like McDonald's (MCD) and Yum! Brands (YUM) and fast casual restaurants like Chipotle (CMG) and Cava (CAVA) are reacting to tariffs.
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Brooke, I know you're also watching the fast food and fast casual sector closely with all of the tariffs. What's going on there?
Yeah, well what we're seeing right now is investors flock to companies like McDonald's, like Wingstop, like Restaurant Brands International, as well as Yum Brands. And what they're really banking on here is the idea that everybody's going to get hurt here, that sales are going to get impacted, but earnings are going to get hit less for these franchisee models. In addition to that, uh, Bernstein analyst Danilo Gargiulo was telling me that they're also pricing in this idea that a recession is going to happen, and in that regard, maybe we'll see more consumers turn to these low cost models. But if you take a look on the flip side, we're also seeing a selloff for companies like Chipotle, like Cava, like Sweetgreen, and that's largely because they their company-owned operators here that they think, investors think that they're going to get hit. But two analysts that I spoke to said, you know, Chipotle, we still like that. We still like Wingstop. They're really thinking long-term here about the implications of them going more international, as well as chicken being really big right now and that could be good news for Wingstop.
All right. Thank you, Brooke. Appreciate it.
