The end of an earnings season can be a great time to discover new stocks and assess how companies are handling the current business environment. Let’s take a look at how Arcos Dorados (NYSE: ARCO) and the rest of the traditional fast food stocks fared in Q1.

Traditional fast-food restaurants are renowned for their speed and convenience, boasting menus filled with familiar and budget-friendly items. Their reputations for on-the-go consumption make them favored destinations for individuals and families needing a quick meal. This class of restaurants, however, is fighting the perception that their meals are unhealthy and made with inferior ingredients, a battle that's especially relevant today given the consumers increasing focus on health and wellness.

The 14 traditional fast food stocks we track reported a slower Q1. As a group, revenues missed analysts’ consensus estimates by 1.2% while next quarter’s revenue guidance was in line.

In light of this news, share prices of the companies have held steady. On average, they are relatively unchanged since the latest earnings results.

Weakest Q1: Arcos Dorados (NYSE: ARCO)

Translating to “Golden Arches” in Spanish, Arcos Dorados (NYSE: ARCO) is the master franchisee of the McDonald's brand in Latin America and the Caribbean, responsible for its operations and growth in over 20 countries.

Arcos Dorados reported revenues of $1.08 billion, flat year on year. This print fell short of analysts’ expectations by 3.6%. Overall, it was a disappointing quarter for the company with a significant miss of analysts’ same-store sales and EPS estimates.

Unsurprisingly, the stock is down 11.8% since reporting and currently trades at $7.20.

Read our full report on Arcos Dorados here, it’s free.

Best Q1: Dutch Bros (NYSE: BROS)

Started in 1992 by two brothers as a single pushcart, Dutch Bros (NYSE: BROS) is a dynamic coffee chain that’s captured the hearts of coffee enthusiasts across the United States.

Dutch Bros reported revenues of $355.2 million, up 29.1% year on year, outperforming analysts’ expectations by 3%. The business had a strong quarter with a solid beat of analysts’ EBITDA estimates and an impressive beat of analysts’ EPS estimates.

Dutch Bros achieved the biggest analyst estimates beat and fastest revenue growth among its peers. The market seems happy with the results as the stock is up 6% since reporting. It currently trades at $62.68.

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

Krispy Kreme (NASDAQ: DNUT)

Famous for its Original Glazed doughnuts and parent company of Insomnia Cookies, Krispy Kreme (NASDAQ: DNUT) is one of the most beloved and well-known fast-food chains in the world.

Krispy Kreme reported revenues of $375.2 million, down 15.3% year on year, falling short of analysts’ expectations by 2.2%. It was a softer quarter as it posted a significant miss of analysts’ EBITDA estimates and EBITDA guidance for next quarter missing analysts’ expectations significantly.

Krispy Kreme delivered the slowest revenue growth in the group. As expected, the stock is down 23.6% since the results and currently trades at $3.29.

Read our full analysis of Krispy Kreme’s results here.

Portillo's (NASDAQ: PTLO)

Begun as a Chicago hot dog stand in 1963, Portillo’s (NASDAQ: PTLO) is a casual restaurant chain that serves Chicago-style hot dogs and beef sandwiches as well as fries and shakes.

Portillo's reported revenues of $176.4 million, up 6.4% year on year. This result lagged analysts' expectations by 2.4%. Taking a step back, it was a mixed quarter as it also recorded a solid beat of analysts’ same-store sales estimates but a significant miss of analysts’ EBITDA estimates.

The stock is up 5.3% since reporting and currently trades at $10.95.

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

Papa John's (NASDAQ: PZZA)

Founded by the eclectic John “Papa John” Schnatter, Papa John’s (NASDAQ: PZZA) is a globally recognized pizza delivery and carryout chain known for “better ingredients” and “better pizza”.

Papa John's reported revenues of $518.3 million, flat year on year. This number beat analysts’ expectations by 0.6%. Aside from that, it was a mixed quarter as it also logged a narrow beat of analysts’ same-store sales estimates but a significant miss of analysts’ EBITDA estimates.

The stock is up 34.2% since reporting and currently trades at $44.75.

Read our full, actionable report on Papa John's here, it’s free.

Market Update

Thanks to the Fed’s rate hikes in 2022 and 2023, inflation has been on a steady path downward, easing back toward that 2% sweet spot. Fortunately (miraculously to some), all this tightening didn’t send the economy tumbling into a recession, so here we are, cautiously celebrating a soft landing. The cherry on top? Recent rate cuts (half a point in September 2024, a quarter in November) have propped up markets, especially after Trump’s November win lit a fire under major indices and sent them to all-time highs. However, there’s still plenty to ponder — tariffs, corporate tax cuts, and what 2025 might hold for the economy.

Want to invest in winners with rock-solid fundamentals? Check out our Top 5 Quality Compounder Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.

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