What Happened?
A number of stocks fell in the afternoon session after a surprisingly weak U.S. jobs report and renewed fears over international trade policy fueled concerns about a slowdown in consumer spending.
The July 2025 jobs report revealed that hiring slowed dramatically, with the U.S. economy adding only 73,000 new jobs—the weakest gain in over two years. Furthermore, job numbers for May and June were revised significantly lower, suggesting the labor market is weaker than previously thought. This is a critical headwind for restaurants, as a shaky job market often leads consumers to cut back on discretionary spending like dining out. Compounding the issue, the announcement of new U.S. tariffs on trading partners has heightened fears of inflation and a broader economic slowdown, prompting investors to sell shares in consumer-facing sectors.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks.
Among others, the following stocks were impacted:
- Sit-Down Dining company Dine Brands (NYSE: DIN) fell 3.6%. Is now the time to buy Dine Brands? Access our full analysis report here, it’s free.
- Modern Fast Food company Potbelly (NASDAQ: PBPB) fell 4.7%. Is now the time to buy Potbelly? Access our full analysis report here, it’s free.
- Sit-Down Dining company Red Robin (NASDAQ: RRGB) fell 3%. Is now the time to buy Red Robin? Access our full analysis report here, it’s free.
- Traditional Fast Food company Jack in the Box (NASDAQ: JACK) fell 3%. Is now the time to buy Jack in the Box? Access our full analysis report here, it’s free.
- Modern Fast Food company Wingstop (NASDAQ: WING) fell 4%. Is now the time to buy Wingstop? Access our full analysis report here, it’s free.
Zooming In On Potbelly (PBPB)
Potbelly’s shares are quite volatile and have had 19 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 3 months ago when the stock gained 22.6% on the news that the company reported strong first quarter 2025 results which significantly beat analysts' EPS and EBITDA and sales estimates. System-wide sales grew nearly 5%, powered by an increase in shop openings and solid performance from both company-owned and franchise locations. Franchise development was a particular strength in the quarter. Potbelly opened four new shops and secured commitments for 40 more, laying a solid foundation for scalable, recurring growth. Zooming out, we think this quarter featured some important positives.
Potbelly is up 22.4% since the beginning of the year, but at $11.47 per share, it is still trading 13.8% below its 52-week high of $13.30 from February 2025. Investors who bought $1,000 worth of Potbelly’s shares 5 years ago would now be looking at an investment worth $3,343.
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