Brad Thomas
Founder & Lead Analyst of Wide Moat Research
Restaurant Brands International has been getting more attractive, with big operational changes underway behind the scenes. x.comÂ
Starbucks looks expensive on an estimate-based earnings screen: 29x next year's projected earnings versus 18x for restaurant chains implies a $49.43-$62.91 fair range against $91.43. That forecast is 80% above trailing earnings; this is levels-only work based on reported estimates, not fundamental diligence. x.comÂ
The Cheesecake Factory now looks more like a momentum trade than a genuine long-term compounder, with its valuation hard to justify. The stock is up 118% this year after an updated app with a free slice of cheesecake lifted traffic and accelerated revenue growth from 4% to 7%, with quarterly revenue topping $1 billion for the first time. But its P/E has surged from 13 to 32 times, and 21 times earnings three years out is difficult to justify for a restaurant business. x.comÂ
Texas Roadhouse is a truly great company but a bit rich at 25x even the lowest forward earnings estimates, making it a tough call. x.comÂ
Red Robin delivered another strong quarter, and with amazing leadership it should be worth more than Wendy's by 2027. x.comÂ
Toast is worth at least $40 because its proven vertical playbook leaves room to double its 20% share of US SMB and mid-market restaurants. It is expanding into food and beverage retail and abroad, and over half its locations adopted the Toast IQ AI assistant within four months. 2025 revenue rose 24% to $6.15B, ARR 26% to $2.05B, GAAP net income hit $342M and free cash flow $608M. Risks include competition, SMB exposure, lending credit risk and memory costs on hardware. x.comÂ
Restaurant Brands' strong defensive profile masks a weak growth engine, a combination that is a trap. Restaurants hold up well in a recession, but QSR's long-term upside looks thin, even as @ErnestWongBWM calls Burger King's 8.6% US comp a narrative violation. x.comÂ
Restaurant stocks, including Chipotle and Wingstop, are uninvestable right now, with too many better places for money. Most have slowing growth, rising costs and poor margins. Wingstop's growth and margins look better than most, but it is still not a buy. x.com x.comÂ