Evercore Flags Brinker as Top Casual Dining Play Amid Slumping Fast Food Sales

U.S. fast food outlets hit a rough patch in April and May with same-store sales slipping 0.5% after a decent start to the year. Evercore points out that casual dining chains have actually been up to the challenge, posting 2% to 3% gains in same-store sales, bucking the declining trend in quick-service restaurants.

Early 2026 looked rosy for fast food with same-store sales growth ranging from 0.5% to 2% in the first quarter. But momentum faded, sliding to about -1% in late May. Evercore holds out some hope that June could bring a turnaround, thanks to easing weather, more aggressive marketing-like McDonald's FIFA partnership-and consumers adjusting to higher gas prices.

Tax refunds and climbing asset values in stocks have helped casual dining, particularly steakhouse chains such as TXRH and DRI. However, these players now face potentially higher beef costs, with delays reopening the Mexican border due to health concerns adding fuel to the fire.

Among casual dining franchises, Evercore continues to favor EAT (Brinker International). The firm has adjusted its same-store sales estimates across various brands including Chili's, CMG (Chipotle), and fast-food giants like Tim Hortons, Burger King, Popeyes, and Taco Bell.

Shifting patterns emerge as younger consumers, specifically Gen Z and Millennials, pull back from restaurant visits. This demographic trend has been supported by Evercore's franchisee lender survey, revealing a dip in willingness to finance many chains. On a brighter note, SBUX continues to show sturdy same-store sales despite the turbulence.

The contrasting fortunes of casual dining versus fast food highlight the sector's complex dynamics. While casual spots ride the wave of tax season boosts and investment gains, fast food faces a tougher environment with recent sales declines and cost pressures.

All eyes on beef prices now, as any prolonging of border restrictions could squeeze margins further at top steakhouses. It raises questions about whether casual dining's current lead can hold if input costs surge unexpectedly.

Brinker's position in this evolving scene is notable, with its performance deviating from broader market softness in quick-service peers. Whether this represents a lasting shift or a temporary quirk will be key to watch.

Meanwhile, fast food chains ramping up marketing might find some relief in summer's better weather and consumer adaptation to rising fuel costs. However, a turnaround in sales growth remains an open question.