Restaurant Sector Review, October 2026

Boardroom Alpha · Sector Review

Restaurant stocks have split: casual-dining chains are up a median 13% over the past year and fast food is down 23%. Facing heavy CEO turnover, several boards paid large one-time awards to keep their chiefs. Pay votes were strongest where the awards paid only for results and the stock had risen, and weakest where awards vested with time. Shareholders are already pushing back on their own: all four pay votes under 70% since 2024 came at chains no activist has pursued in five years; Jack in the Box (JACK), which has faced one, was next at 71%. The open question is whether activists will lean in too.

In this review: Returns · CEO carousel · One-time awards · Pay votes · Director votes · Proposals · Insiders · Activism · Pressure points · What to watch

1. Casual dining is up, fast food is down

Casual-dining chains such as Darden (DRI), Brinker (EAT) and Cheesecake Factory (CAKE) are up a median 12.8% over the past year. The median in every other segment is down about 20%: fast food, including McDonald’s (MCD), Wendy’s (WEN) and Wingstop (WING); fast casual, including Chipotle (CMG) and Cava (CAVA); and coffee, including Dutch Bros (BROS) and Black Rock Coffee (BRCB).

Much of the gap tracks same-store sales, the sales at restaurants open at least a year. Nine of 30 chains reported a decline in their latest quarter, and six of those also trade 30% or more below their 52-week high: Wingstop, Papa John’s (PZZA), Wendy’s, Jack in the Box, Portillo’s (PTLO) and Kura Sushi (KRUS). By contrast, Cheesecake Factory and BJ’s Restaurants (BJRI), whose same-store sales rose about 6% and 7%, saw their shares roughly double.

The newest listings fared worst

Of the restaurant chains that have listed on a US exchange since 2021, including two from Asia, only Cava and Dutch Bros have made money for anyone who bought at the first day’s close. Portillo’s, Sweetgreen (SG) and GEN Restaurant (GENK) have lost about a third or more a year.

When sales stall, boards either replace the CEO or pay to keep one. This group did both.

2. CEOs keep changing, often within the group

The group hires from itself. Three CEOs went from one company in the group to another in 2024: Brian Niccol and Robert Lynch directly, Todd Penegor six months after Wendy’s ended his employment without cause. Of the five companies involved, only Starbucks (SBUX) has gained since: a new CEO, even a proven one, is no quick fix.

• Brian Niccol
  Chipotle → Starbucks. Chipotle promoted COO Scott Boatwright.
• Robert Lynch
  Papa John’s → Shake Shack (SHAK). Papa John’s hired Todd Penegor from Wendy’s.
• Todd Penegor
  Wendy’s → Papa John’s. Wendy’s hired PepsiCo’s Kirk Tanner, who left for Hershey in 2025.

That turnover is one reason boards gave for paying to keep the executives they had. Brinker’s compensation committee said its awards to the CEO and two other executives were meant in part to “retain them during a period of high executive turnover in the industry.”

3. Boards paid to keep their CEOs

At least 22 of the 31 companies have given their CEO a one-time award since 2023, such as a retention, sign-on or promotion grant. Six were retention or special grants of $6 million or more to sitting or interim CEOs, made between August 2024 and September 2025 and led by Wingstop’s $25 million. Some pay out only if performance goals are met; others vest with time, simply for staying. Boards knew they were not alone: Darden’s pay consultant told its committee that similar awards “had been granted recently and with some frequency within the restaurant, retail, and broader hospitality industries.”

The grants also put their CEOs at the top of the pay table. The CEOs of Wingstop, Darden and Starbucks each had reported pay of more than $30 million in their latest fiscal year, lifted by a grant that has not yet vested. Without its $25 million grant, Wingstop’s CEO would rank about 13th.

Set against returns, seven CEOs rank at least 10 places higher on pay than their company does on three-year return: Wingstop, First Watch (FWRG), Yum China (YUMC), Papa John’s, Chipotle, McDonald’s and Starbucks.

Most holders signed off. Where they did not is the story.

4. Holders balked at time-vested awards

Say on pay, shareholders’ yearly advisory vote on executive pay, still passes easily in this sector: every vote passed, and the median held at about 94%. But the weak tail grew: eight companies got under 90% support in 2026, against five in 2023, three in 2024 and four in 2025. Cracker Barrel (CBRL) and Brinker still vote in November.

The votes lined up with how each award was built, and funds that published reasons cited missing performance conditions. Brinker’s pay plan, with a performance-only award, got 96.2% and Darden’s 90.9%. Chipotle’s got 55.4% after time-vested retention grants, First Watch’s 63.9%, and Wingstop’s 50.4%; Wingstop’s award is half time-vested, and its shares fell 54% over the year. T. Rowe Price funds voted all their Wingstop shares against a plan they had backed a year earlier.

Several funds that publish their voting reasons objected to one-time awards, some in wording other funds also used:

• Wingstop, 2026
  “One-off payments inadequately justified. Excessive pay quantum.” (UBS, US funds)
• First Watch, 2026
  “CEO total pay increased significantly due to a special retention award that entirely lacks pre-set performance conditions.” (UC Investments)
• Chipotle, 2025
  “…it is recognized that the company experienced significant leadership transition during FY24. However … large one-time retention grants were provided to certain executives, including the CEO, and these concerns are exacerbated, as they entirely lack performance criteria.” (Irish Life Investment Managers)

Low votes have not lasted when boards respond. Chipotle, at 55.4% in 2025, and Texas Roadhouse (TXRH), at 60.7% in 2024, each said a one-time payment drove the vote: Chipotle’s 2024 retention grants and Texas Roadhouse’s 2023 separation payment to a former finance chief. Chipotle contacted holders of 45% of its shares, and Texas Roadhouse signed new executive agreements and lengthened its performance periods. A year later, support was back at 95.3% and 94%. Wingstop and First Watch face the same test in 2027. We looked at Wingstop’s award and vote in an earlier report.

From pay to directors

Because pay votes are advisory, the sharper pressure lands on directors. The two lowest director votes came where an activist campaigned against the director. Gilbert Dávila got 41.2% at Cracker Barrel in 2025, short of a majority, and resigned. David Goebel, whom Biglari Capital campaigned against, was re-elected as Jack in the Box’s chair with 50.6% in February 2026, down from 95.1% a year earlier, and retired from that board in May. He also chairs Wingstop’s compensation committee, and Wingstop holders gave him 98.1% in 2025. In all, 27 company nominees fell below 80% at nine companies, and ten fell below 70%.

Many of the rest are at classified boards, where only about a third of directors face a vote each year. Cava, First Watch, Black Rock Coffee and Jersey Mike’s (JMKE), all newer listings, have classified boards; most older companies elect every director annually. Directors at Cava, Shake Shack and First Watch fell under 80% in two or three different years.

• Cracker Barrel, 2025
  On Gilbert Dávila, explaining its vote against: “he is the director best held accountable for the recent logo controversy and subsequent loss of shareholder value.” (UBS Asset Management)
• First Watch, 2026
  On Irene Chang Britt, voting against because the board is classified: “L&G supports a declassified board as directors should stand for re-election on an annual basis.” (Legal & General Investment Management)

What holders will back: fewer defenses

Since 2024, shareholders have voted on 22 restaurant-specific proposals, on animal welfare, antibiotics, packaging and kitchens, and passed none; the best, on poultry welfare at McDonald’s, got 36%. Measures that remove takeover defenses did far better. Proposals to let a simple majority, rather than a supermajority, approve key changes passed with 97% or more at Domino’s (DPZ), Starbucks and Papa John’s. Limits on “blank-check” preferred stock, which a board can issue without a shareholder vote, passed at Bloomin’ Brands (BLMN) and Wendy’s.

A vote against is the cheapest form of pressure. Insiders and activists act with their own money.

5. Insiders sold; few bought

At 15 of the 31, no officer or director bought shares on the open market, including McDonald’s, Yum (YUM), Darden, Texas Roadhouse, Domino’s, Brinker, Restaurant Brands (QSR), Yum China and Wingstop. Buying came mostly at smaller chains, often soon after a sharp fall. The three biggest sellers were founders and early backers at Dutch Bros and Cava. Some of those sales were under prearranged trading plans.

• Dutch Bros
  Co-founder Travis Boersma sold $854 million under prearranged trading plans, and in February adopted another to sell up to 12 million shares through May 2027.
• Black Rock Coffee
  Co-founder entities pledged about 27% of the shares for a margin loan. In May one sold 5.8 million units to repay it, and sponsor Cynosure reported buying 13.6 million at $5.35.
• Shake Shack
  Six insiders, including the CEO and Danny Meyer, the chairman, bought $3.2 million of stock on one day in May, a week after the shares fell 28%.
• Sweetgreen
  CEO Jonathan Neman has 1 million shares pledged for a personal loan under a board-approved founder policy.

6. Activists have been in the sector. Is more to come?

Activism is not new here: 13 of the 31 companies have faced an activist or a bid in five years. So far it has largely missed several of the chains that stand out most in this review on returns, pay votes and Activist Risk Score, Boardroom Alpha’s 0–100 measure of exposure to a campaign (see section 7). Most campaigns ended in cooperation agreements that added directors in exchange for standstills, in which the activist agrees to hold off for a set period. Biglari Capital has taken large stakes in three: Cracker Barrel, Jack in the Box and El Pollo Loco (LOCO). Starboard Value was reported in August to hold a stake in Shake Shack; no filing shows it yet.

One activist stake stands out for its size and age. Trian Fund Management, Wendy’s largest reported holder, had 16% at June 30. Nelson Peltz left the board in 2024 and Matthew Peltz in 2025, and Bradley Peltz has since joined it. In February, Trian said in an amended 13D, the ownership report large holders file, that it was talking with financing sources and possible partners. Press reports in August described a take-private plan; reports weeks later said it had been shelved.

The five acquired since October 2023 were Fiesta, Carrols, Chuy’s, Potbelly and Denny’s.

7. Where the pressure points pile up

We checked seven measures that shareholders and activists often cite: returns lagging the group, a stock 30% or more below its 52-week high, falling same-store sales, a pay vote under 90%, a director under 80%, CEO pay well ahead of returns, and a Boardroom Alpha Activist Risk Score of 75 or more out of 100. We left out the five companies where one holder or a founder group controls the vote.

Eleven companies meet three or more. Wingstop meets all seven, First Watch and Papa John’s six, Jack in the Box five and Portillo’s four.

• Wingstop
  Seven of seven, but two (the pay vote and pay ahead of returns) are tied to one $25 million grant. Its sub-80% director votes date from 2024, before holders approved annual elections; its 2025 and 2026 nominees got 96.5% or more. Wingstop says it withholds the award’s sales goals as “commercially sensitive” and will disclose them at vesting. Our Wingstop report.
• First Watch
  A 63.9% pay vote after a $6 million retention grant, a director at 65.8%, and a classified board.
• Papa John’s
  Take-private approaches in 2025 and 2026 that, per press reports, led to no deal, and a dividend suspended in August, a move the company expects to accelerate investment in its transformation strategy.
• Cava, Chipotle, Domino’s
  Three each. Cava also has a classified board.

What to watch

• Oct. 23
  Nathan’s Famous (NATH) shareholders vote on its agreed sale to Smithfield Foods.
• Late Oct. to Nov.
  Third-quarter same-store sales at the six chains with falling sales and shares 30% or more off their highs: Wingstop, Papa John’s, Wendy’s, Jack in the Box, Portillo’s and Kura Sushi.
• November
  Pay votes at Cracker Barrel and Brinker close the 2026 season; Brinker’s is the second vote since its performance-only award.
• Winter to spring 2027
  Most windows to nominate directors for 2027 meetings close in the winter. At their spring meetings, Wingstop and First Watch show how they responded to this year’s votes. Also watch whether Starboard discloses a Shake Shack stake.

Notes: The group is the 31 US-listed restaurant companies worth more than $150 million, excluding foreign issuers and holding companies. Returns are total returns to the Oct. 6, 2026 close; IPO and CEO-move returns are annualized. Return and sales counts cover 30: Jersey Mike’s listed in July 2026. The IPO chart adds two Asian chains and GEN Restaurant, outside the group, and leaves out listings with under a year of trading. CEO pay is the reported total, with stock at grant value. Same-store sales are each company’s own measure. Insider figures are open-market trades reported on Form 4. Fund rationales are examples, not a count of votes. The pressure-point count is a tally of public facts and our Activist Risk Score, not a forecast of activism.

Sources: company SEC filings, fund N-PX filings and published vote rationales, press reports and Boardroom Alpha data, as of Oct. 7, 2026. Boardroom Alpha is an independent research and analytics company and does not invest. This is not investment advice.