Hot Picks: Dutch Bros, McDonald’s, Chipotle seen gaining restaurant share

Restaurant companies are navigating softer consumer demand and competitive pressures with value promotions, menu innovation and expansion plans aimed at driving traffic growth. Analysts say some brands are better positioned than peers to gain market share despite ongoing macroeconomic uncertainty.

BNN Bloomberg spoke with Jon Tower, equity research analyst at Citi, about his top restaurant sector picks, including Dutch Bros, McDonald’s and Chipotle Mexican Grill, and why he sees long-term upside tied to beverage innovation, loyalty programs, store expansion and operational investments.

Key Takeaways

• Dutch Bros is expanding rapidly across the U.S., with growth driven by customizable energy drinks, loyalty programs and younger consumers.
• McDonald’s is rolling out new beverage offerings, menu innovation and potential restaurant remodels to strengthen customer traffic and market share.
• Chipotle is investing in loyalty programs, kitchen upgrades and catering capabilities to support future same-store sales growth.
• Restaurant chains are increasingly relying on product innovation, promotions and digital engagement to attract budget-conscious consumers.
• Analysts see companies with strong expansion strategies and operational investments as better positioned for long-term growth in the sector.

Read the full transcript below:

LINDSAY: It’s time now for Hot Picks, and today we are zeroing in on the restaurant sector. Our next guest is highlighting a beverage company whose Texas business may be going from problem child to golden child. Let’s welcome Jon Tower, equity research analyst at Citi. Great to have you with us. Thanks so much.

JON: Thanks for having me, Lindsay.

LINDSAY: We’ll get right into your hot picks for today. This first brand may not be as well known as the next two, so let’s start with Dutch Bros. Tell us more about it and why it’s your hot pick.

JON: Dutch Bros is a fast-growing beverage concept, mostly drive-thru with walk-up windows, that has been compounding store growth at a high-teens to low-20 per cent pace. That’s translating into similar levels of EBITDA growth.

They started in Oregon and have expanded through Texas, with newer locations now in markets including the Carolinas and Florida. The company has built its business around the away-from-home beverage category, initially focused on cold coffee, but importantly, it has become a leader in customizable energy drinks, which now make up about 25 to 26 per cent of sales.

The brand has been winning with younger consumers, including Gen Z and millennials, through product innovation, strong hospitality, fast service and attractive price points. We see that continuing.

The stock has come under pressure over the past 12 months, particularly this year, as investors worry about McDonald’s and other companies moving further into the beverage and energy-drink market in 2026. I think those fears are overblown. While McDonald’s and others will build out their beverage platforms, Dutch Bros has shown it has a strong customer loyalty program and a customer base that keeps coming back.

As more companies highlight the energy category, I think consumers will continue gravitating toward Dutch Bros because of its customization and hospitality. I think the stock is undervalued, and as we move through the summer — when McDonald’s is expected to launch its energy platform — investors may start to see the competition concerns fade.

LINDSAY: Why was Texas originally considered a problem child?

JON: Under the previous management team, the company expanded quickly into Texas without necessarily having a thorough strategy for how to approach the market. Under the new management team, there’s been a much more thoughtful approach.

The company is investing more heavily in media and social marketing to build awareness and customer frequency. It also has a much stronger rewards program in place now. Brand familiarity is higher when it enters new markets, and once customers try the product, they tend to come back because the experience is strong and the price point is reasonable.

LINDSAY: Let’s move on to your next pick, McDonald’s. You say the company is dealing with some of the same macroeconomic pressures as peers, but why do you like the stock?

JON: The balance sheet is phenomenal, and I think the company has several drivers in place that can help improve the story in the U.S.

When McDonald’s reported results last week, management talked about a weaker April, partly because of difficult comparisons tied to last year’s Minecraft promotion. Going forward, the comparisons become easier over the next several months.

We’re also heading into World Cup season, and McDonald’s is an official restaurant sponsor of the tournament. More importantly, the company is accelerating both marketing and product innovation.

Last week, McDonald’s launched the first phase of its new beverage platform in the U.S., including refreshers — carbonated drinks with syrup or dried fruit aimed at attracting consumers at different times of day. The next phase will likely include energy beverages later this summer, and they’ll be offered at value price points.

The broader away-from-home beverage category continues to grow, and I think that will help drive traffic. The company also has additional product innovation coming, including more chicken offerings later this year.

Importantly, McDonald’s is also preparing for another major remodel cycle in the U.S. We may hear more details during the second-quarter earnings call and again at its investor day in September. The last major remodel program transformed the restaurant base in the U.S. and helped the company pull ahead of competitors in terms of customer perception and traffic.

I think McDonald’s has a good path toward multi-year same-store sales growth, while continuing to expand globally at roughly four to five per cent annually.

LINDSAY: Lastly, let’s get to Chipotle. You believe there’s room for positive growth and a positive re-rating for the stock. Why?

JON: The company has been conservative with its guidance to start 2026, and management has set a relatively low bar for expectations.

What we’re seeing across the industry is a faster pace of product innovation and new menu offerings designed to bring customers back into stores. Chipotle is pairing that with stronger marketing, more discussion around value and a revamped loyalty program.

I think those factors will help drive accelerating same-store sales growth in the U.S. The company is still delivering high single-digit unit growth while also investing in new kitchen equipment that should improve efficiency.

Those upgrades could also help support catering across the restaurant base, which may become another layer of sales growth.

To me, the key point is that accelerating same-store sales growth in this industry often translates into stronger stock momentum, and Chipotle’s shares have already been under pressure for the past year.

LINDSAY: We’ll have to leave it there. We’re out of time. Jon Tower, equity research analyst at Citi, thanks for joining us.

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This BNN Bloomberg summary and transcript of the May 12, 2026 interview with Jon Tower are published with the assistance of AI. Original research, interview questions and added context was created by BNN Bloomberg journalists. An editor also reviewed this material before it was published to ensure its accuracy and adherence with BNN Bloomberg editorial policies and standards.