Motley Fool Money – What’s Eating at Restaurant Stocks?

Air Date: August 18, 2025
Host: Rick Menars
Analysts: Alicia Alfieri, Jason Hall

Episode Overview

This episode dives into the recent challenges faced by restaurant stocks amid a tough economic climate, spotlighting why both high-flying chains and discount leaders are seeing headwinds. The panel also examines some surprising companies that have more than doubled their stock prices this year, playing a game of “Beat or Defeat” to assess their prospects. The episode offers a long-term investor’s perspective, focusing on what’s driving trends and where opportunities might arise.

Key Discussion Points & Insights

1. Earnings Season: Companies to Watch

(00:00–06:09)

TJX Companies (T.J.Maxx, Marshalls, HomeGoods)

• Jason Hall: Praises TJX’s ability to excel as a buyer and retailer even in tough economies.

  • “Besides Costco, TJX may be the best retailer in the U.S. It is exceptional at two really important things: being a great buyer and getting merchandise in the right stores, in the right markets, to move it quickly.” (00:50)
  • TJX acts as a “release valve” for excess inventory in retail, securing good deals on merchandise.
  • Their "treasure hunt" in-store experience draws both value-seeking and affluent shoppers.
  • Despite a tough climate, last quarter's comps were up 3% versus competitors’ declines.

• Alicia Alfieri: Asks if TJX will benefit as shoppers turn to value stores.

  • Jason expects continued resilience: “People whose personal finance situation is still fine... are going to continue to go there more. Instead of shopping upstream, they're going to come downstream.” (02:38)

Viking Holdings (River Cruises)

• Alicia Alfieri: Interested due to the brand’s devoted clientele in the affluent retiree segment.
  • Strong bookings: “By the end of their first quarter, Viking already had 92% of their 2025 capacity booked.” (03:19)
  • Potential downside in downturns, but less vulnerable than broader cruise lines since they cater to an older, affluent demographic.

Baidu (China’s Search Giant)

• Rick Menars: Notes struggles with revenue and competition, but highlights Baidu’s investments in AI and cloud.
  • “You can buy a cash rich Baidu for less than 10 times next year's targets.” (04:35)
• Baidu faces challenges due to tariffs and access to AI chips but may innovate its way through.

2. Restaurant Stocks: What’s Eating Them?

(06:40–10:46)

• Alicia Alfieri: Economic pressures are dampening restaurant spending, especially at higher-priced chains.

  • Chipotle’s comparable sales fell 4% after an 11% rise last year.
    • “Chipotle talked about how much their traffic has been tracking along with consumer sentiment.” (06:58)
    • Management attributes some losses to diners switching to $5 meal deals elsewhere.
  • McDonald’s stands out, riding affordability with a 3.8% global comp sales increase.
    • $5 meal deal and $2.99 snack wraps are successes, but even McDonald's sees declining visits from core lower-income customers.
    • There’s a caution around over-discounting to maintain profitability.

• Rick’s observation: Highlights McDonald’s “barbell pricing”—from $5 deals to $16 collectible kids’ meals.

  • Alicia calls this a smart strategy: “I do think that it's smart to try to hit multiple sides of the consumer continuum.” (09:15)

• Jason Hall: Sees industry-wide pullback as a potential opportunity for value investors.

  • “As an investor, honestly, that makes me a little bit more interested... because it could create some opportunities for investors to buy some really great quality businesses that have strong track records over the long term.” (10:04)
  • Business models aren’t broken; it’s a temporary confidence issue.

3. Beat or Defeat: 2025’s Surprising Stock Doublers

(11:25–15:13)

The panel plays “Beat or Defeat,” predicting if these big gainers will continue to outperform.

Roblox (Up 117% YTD)

• Jason Hall: Defeat. Points to high valuation (19x sales), mounting losses, and legal headwinds.
  • “It just seems like the valuation metrics don't necessarily support a continued rally.” (11:55)
• Alicia Alfieri: Sees potential if legal issues (child safety lawsuit in Louisiana) are resolved.
  • “If Roblox can solve this issue, I think it's actually a good candidate to beat... Average daily users up 41%, hours of engagement up 58% year over year.” (12:35)

Palantir (Up 139% YTD)

• Jason Hall: Defeat. Has shorted the stock.
  • “Let me say this. I think it is an extraordinary business. But the valuation... is incredibly expensive and the expectations I think have become so dislodged from what the business can realistically do.” (13:11)
• Alicia Alfieri: Confirms concerns, citing a price-to-sales ratio over 100.
  • “Priced beyond perfection. Defeat.” (14:09)

Celsius (Up 150% YTD)

• Alicia Alfieri: Beat, due to effective acquisitions (Aulani Nu) and growth, but warns of volatility.
  • “It has momentum, so I'm thinking it'll be [beat].” (14:22)
• Jason Hall: Also Beat. Notes low expectations, the strategic Aulani Nu buy, and international opportunity.
  • “Of these three, this is the one that's most likely to beat.” (14:44)

Notable Quotes & Moments

• Jason Hall on TJX:
  “Its strength as a buyer is going to be a really good situation for it, particularly if we see tariffs do weird things with inventory levels.” (02:38)

• Alicia Alfieri on Chipotle’s struggle:
  “Management believes that some consumers are making eating decisions based on price right now.” (07:14)

• Rick Menars on McDonald’s pricing:
  “So it seems like McDonald's is playing both the low end and the high end. Does that barbell pricing, does that sound like it’s a good strategy for you or is that a problem?” (08:55)

• Jason Hall on investor opportunities:
  “That’s one of the ways that long term investors can juice their portfolios and really win over the long term.” (10:13)

• Alicia Alfieri on Celsius volatility:
  “Anyone who has been watching this stock... knows it’s been a roller coaster and it could just as easily fall into that defeat category.” (14:31)

Timestamps for Key Segments

• 00:00–06:09: Earnings season highlights (TJX, Viking, Baidu)
• 06:40–10:46: Restaurant stocks under pressure (Chipotle, McDonald's)
• 11:25–15:13: Beat or Defeat? – Roblox, Palantir, Celsius

Takeaway for Investors

The market’s recent turbulence—especially in restaurant and high-growth stock segments—is more a function of shifting consumer sentiment and high expectations than broken business models. Opportunities may arise for patient investors in fundamentally strong companies. As always, valuation and long-term trends matter, and temporary market swoons can signal buy moments for disciplined Fools.