The last earnings period in the restaurant universe was a strange one. On balance, industry same-store sales were relatively robust, at least compared with recent performances. On the other hand, investors pretty much punished anybody that showed even the slightest slowdown.
How do you explain a 30% decline in Cava stock when its same-store sales increased 21.2% in the period? (Valuation and expectations, I know; still, it just makes people scratch their heads when an otherwise strong earnings report from a company that has a legitimate chance to truly be The Next Chipotle yields that kind of decline, but I digress …)
In any event, the fourth quarter was better than you think it was. While a few companies have yet to report, the average same-store sales among those that did was just under 2%, which is on pace to be the best of 2024. Many stocks were punished because of commentary on their early start to 2025. But at least most of them ended last year on a positive note.
Here are our winners and losers from the fourth calendar quarter:
Winner: The potential of casual dining
I’m not sure what else we can say about Chili’s at this point. The casual-dining chain has never done 30%-plus. It was the best same-store sales performance of the quarter, and of the year, and outside the post-pandemic recovery period it was likely the best sales result from a publicly traded casual-dining chain in at least 20 years.
In the process, Chili’s established a playbook for the rest of the casual-dining universe. To wit: BJ’s Restaurants and Red Robin both used a playbook similar to the one used by Chili’s to lift sales last year. They’ve improved operations and paired it with deals to get customers in the door.
Headlines on Red Robin rightly focused on its closures. But the company is showing real momentum, thanks to its focus on operations and deals like $10 Cheeseburger Tuesdays. BJ’s might be the bigger surprise, as a $13 Pizookie meal deal boosted traffic and led to a 5.5% same-store sales result.
People will go to casual-dining concepts if the service is good and the price is right.
Loser: Applebee’s
The venerable casual-dining chain appears on the verge of losing its status as the country’s largest bar-and-grill chain to longtime rival Chili’s. Applebee’s same-store sales declined 4.7%, a ridiculous 36 percentage points behind.
The chain’s president left. And it is now operating 47 underperforming franchise restaurants. Its big focus appears to be a combined location with sister chain IHOP that proved so complicated that a bunch of workers at the first location quit.
Winner: Taco Bell
The Mexican fast-food chain reported 5% same-store sales growth last quarter, then said that its sales accelerated early this year when just about everybody else (with a few key exceptions) said that sales slowed. And then the company went out and hosted its Live Mas Live and everybody treated people like the CMO as if they’re rock stars. Amazing.
(I did a whole big story on that whole event, which you should read.)
Loser: KFC
On the other side of the Yum U.S. ledger is KFC, which is really struggling. Same-store sales declined 5% in the fourth quarter. The company is moving its headquarters from its longtime home of Louisville, Kentucky, to Plano, Texas, for reasons that don’t entirely make sense right now.
The good news for KFC is it has a new U.S. president in Catherine Tan-Gillespie and the chain has a new global CEO in Scott Mezvinsky who appears intent on reversing the chain’s domestic decline. They’ll have work to do.
Winner: Cracker Barrel
Don’t look now but the highwayside family-dining chain appears to be doing just fine, even if early-year results are being hurt by the same low-income consumer affliction as everyone else.
The chain’s 4.7% same-store sales growth at the end of 2024 easily paced the family-dining sector, including chains like First Watch. The CEO, Julie Felss Masino, is a Taco Bell veteran because of course she is.
Loser: The pizza business
Literally nobody in the pizza sector did well last quarter. The best performer was (insert drum-roll here) Pizza Inn, at 0.8%. Domino’s (0.4%) was the only other chain above water. Pizza Hut (-1%), Papa Johns (-4%) and Pie Five (-11.4%) all were negative.
As a side note, why do I bother reporting Pie Five results at all? The brand is down to 20 locations. The brand started 2024 with average unit volumes of $670,000. So that decline was, well, not great.
Regardless, the pizza business as a whole is having challenges and it really doesn’t matter the service style.
Winner: Dutch Bros
We listened to Dutch Bros’ earnings call last month. One analyst literally said on the call that it was difficult to find anything bad about the quarter. Just about everything surprised investors to the upside, including last quarter’s same-store sales (6.9%) and commentary on the current quarter (not seeing any issues). The drive-thru beverage chain is hitting its stride after an inconsistent few years as a public company.
Loser: Del Taco
Finally, we have Del Taco, which was sold to Jack in the Box more than two years ago and doesn’t appear to be doing all that well under its new ownership. The chain’s same-store sales progressively worsened as 2024 progressed. And then it closed all its Colorado locations under strange circumstances.
Meanwhile, sister chain Jack in the Box had a not-bad-as-feared quarter, which only made the Mexican chain appear to be doing worse. Oh and rival Taco Bell is up there with the period’s winners.