Starbucks Shines, QSR Faces Challenges: BofA's 2025 Restaurant Outlook

Industry Overview - Analysts expect slow but healthy job growth to support restaurant demand in 2025, with industry pricing moderating and promotional activity increasing as input prices fall [1] - Industry growth in 2024 aligned with historical averages, with Blackbox industry SSSG at -0.2% compared to the 2013-2019 average of -0.1%, and PCE growth at +4.9% versus the pre-COVID average of +5.1% [2] - Growth patterns were atypical in 2024, with fine dining and traditional Quickservice underperforming, while midscale and casual dining performed better [2] Company-Specific Insights - Starbucks Corporation (SBUX) maintains a Buy rating with a price forecast of $117, reflecting confidence in the brand's strength and resource reallocation potential [3] - Restaurant Brands International Inc. (QSR) receives an Underperform rating, with expectations that reinvestment needs will constrain topline and EPS growth, alongside lowered revenue forecasts due to increased competitive pressures [4] - Krispy Kreme, Inc. (DNUT) sees a price forecast reduction from $17 to $14, reflecting lower topline growth and higher operating expenses in the first half of 2025 [4][5] - Sysco Corporation (SYY) maintains a price forecast of $87, with higher EBITDA estimates due to lower operating expense assumptions [5]