Looking back on modern fast food stocks’ Q3 earnings, we examine this quarter’s best and worst performers, including Potbelly (NASDAQ:PBPB) and its peers.

Modern fast food is a relatively newer category representing a middle ground between traditional fast food and sit-down restaurants. These establishments feature an expanded menu selection priced above traditional fast food options, often incorporating fresher and cleaner ingredients to serve customers prioritizing quality. These eateries are capitalizing on the perception that your drive-through burger and fries joint is detrimental to your health because of inferior ingredients.

The 6 modern fast food stocks we track reported a mixed Q3. As a group, revenues were in line with analysts’ consensus estimates.

Amidst this news, share prices of the companies have had a rough stretch. On average, they are down 6.1% since the latest earnings results.

Best Q3: Potbelly (NASDAQ:PBPB)

With a unique origin story where the company actually started as an antique shop, Potbelly (NASDAQ:PBPB) today is a chain known for its toasty sandwiches.

Potbelly reported revenues of $115.1 million, down 4.7% year on year. This print exceeded analysts’ expectations by 1.7%. Overall, it was a stunning quarter for the company with a solid beat of analysts’ EPS and EBITDA estimates.

Bob Wright, President and Chief Executive Officer of Potbelly Corporation, commented, “During the third quarter, our team once again demonstrated the effectiveness of our five-pillar strategic plan amidst a dynamic consumer environment. Our app and Potbelly Perks program drove a positive shift in our comp trajectory and engagement with our brand, while our $7.99 everyday value platform supported sales and traffic; We achieved a 70-basis point year-over-year improvement in our shop profit margins; metered our G&A spend to deliver EBITDA growth; and opened eight new shops with our franchise partners as we further accelerate our unit growth. While I’m thrilled with what we’ve accomplished together to date, I believe the future for Potbelly is even brighter.”

Potbelly achieved the biggest analyst estimates beat but had the slowest revenue growth of the whole group. Unsurprisingly, the stock is up 18.9% since reporting and currently trades at $9.81.

Is now the time to buy Potbelly? Access our full analysis of the earnings results here, it’s free.

Shake Shack (NYSE:SHAK)

Started as a hot dog cart in New York City's Madison Square Park, Shake Shack (NYSE:SHAK) is a fast-food restaurant known for its burgers and milkshakes.

Shake Shack reported revenues of $316.9 million, up 14.7% year on year, in line with analysts’ expectations. The business had a very strong quarter with an impressive beat of analysts’ EPS and same-store sales estimates.

The market seems happy with the results as the stock is up 5.9% since reporting. It currently trades at $120.33.

Is now the time to buy Shake Shack? Access our full analysis of the earnings results here, it’s free.

Weakest Q3: Noodles (NASDAQ:NDLS)

Offering pasta, mac and cheese, pad thai, and more, Noodles & Company (NASDAQ:NDLS) is a casual restaurant chain that serves all manner of noodles from around the world.

Noodles reported revenues of $122.8 million, down 4% year on year, falling short of analysts’ expectations by 2.5%. It was a disappointing quarter as it posted a significant miss of analysts’ EBITDA and EPS estimates. In addition, the company lowered its full year revenue guidance.

Noodles delivered the weakest performance against analyst estimates and weakest full-year guidance update in the group. As expected, the stock is down 39.5% since the results and currently trades at $0.73.

Read our full analysis of Noodles’s results here.

Wingstop (NASDAQ:WING)

The passion project of two chicken wing aficionados in Texas, Wingstop (NASDAQ:WING) is a popular fast-food chain known for its flavorful and crispy chicken wings offered in a variety of sauces and seasonings.

Wingstop reported revenues of $162.5 million, up 38.8% year on year. This number beat analysts’ expectations by 1.6%. Aside from that, it was a slower quarter as it produced a significant miss of analysts’ EBITDA and EPS estimates.

Wingstop scored the fastest revenue growth among its peers. The stock is down 9.4% since reporting and currently trades at $334.51.

Read our full, actionable report on Wingstop here, it’s free.

Sweetgreen (NYSE:SG)

Founded in 2007 by three Georgetown University alum, Sweetgreen (NYSE:SG) is a casual quick service chain known for its healthy salads and bowls.

Sweetgreen reported revenues of $173.4 million, up 13% year on year. This print came in 1.2% below analysts' expectations. It was a slower quarter as it also recorded a miss of analysts’ EBITDA estimates.

Sweetgreen pulled off the highest full-year guidance raise among its peers. The stock is down 10% since reporting and currently trades at $38.

Read our full, actionable report on Sweetgreen here, it’s free.

Market Update

The Fed’s interest rate hikes throughout 2022 and 2023 have successfully cooled post-pandemic inflation, bringing it closer to the 2% target. Inflationary pressures have eased without tipping the economy into a recession, suggesting a soft landing. This stability, paired with recent rate cuts (0.5% in September 2024 and 0.25% in November 2024), has fueled a strong year for the stock market in 2024. The markets surged further after Donald Trump’s presidential victory in November, with major indices reaching record highs in the days following the election. Still, questions remain about the direction of economic policy, as potential tariffs and corporate tax changes add uncertainty heading into 2025.

Want to invest in winners with rock-solid fundamentals? Check out our Hidden Gem Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.

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