Restaurant promotions to intensify as consumer spending weakens

Investing.com -- A tougher promotional battle is expected among U.S. restaurant chains in the second half of 2025 as consumer spending shows signs of strain. Stifel analysts say larger brands like McDonald’s, Domino’s and Taco Bell better positioned to withstand the pressure.

“Restaurants continue to report weak consumer spending, although full-service restaurants are outperforming most other categories. Consequently, we anticipate a more competitive promotional environment in 2H25, which should favor the largest chains,” Stifel analyst said.

Data showed restaurant spending grew strongly in the second quarter, led by an 8.5% jump at full-service restaurants. Limited-service outlets, by contrast, grew 3.4%, ranking near the bottom among consumer categories.

Among its top stock ideas, Stifel named Brinker International, operator of Chili’s, on improvements in operations, food quality and marketing.

It also backed Dutch Bros, pointing to strong unit economics, expansion potential and ongoing sales initiatives, and Planet Fitness, which offers “a buying opportunity” after shares fell on concerns about customer attrition despite strong results.

McDonald’s remains a stock under debate, as per Stifel. Same-store sales are expected to improve from September as value promotions ramp up, though recent sales boosts have been short-lived.

“Sustained performance will likely depend on whether the underlying trend continues to improve outside of heavy promotional periods,” the note said.

Chipotle, meanwhile, is facing weaker-than-expected sales in the current quarter. Stifel cut its estimate to flat, but said the stock’s valuation, at the lowest forward multiple since 2012, makes it attractive for long-term investors.

Traditional fast-food rivals Burger King parent Restaurant Brands International and Wendy’s could come under pressure from McDonald’s promotions.

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