What Happened?
Shares of american restaurant chain BJ’s Restaurants (NASDAQ: BJRI) fell 3.5% in the afternoon session after broader weakness in the casual dining sector after competitor Portillo's (PTLO) significantly lowered its 2025 financial outlook.
Portillo's announced it now expects same-store sales to decline between 1% and 1.5% for the year, a sharp reversal from its previous forecast of 1% to 3% growth. The company attributed the downgrade to challenging industry conditions, including sluggish traffic and intense pricing and promotional dynamics. The negative update from a peer has fueled investor anxiety about the health of the entire restaurant industry. The news suggests that consumers may be cutting back on dining out due to broader economic pressures, raising concerns that other chains like BJ's could face similar headwinds and difficulties in the near future.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy BJ's? Access our full analysis report here, it’s free.
What Is The Market Telling Us
BJ’s shares are somewhat volatile and have had 14 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 previous big move we wrote about was 29 days ago when the stock gained 3.1% on the news that investors cheered a government report showing that inflation remained steady in July. The steady inflation figures have fueled expectations that the Federal Reserve may soon consider an interest rate cut to stimulate the economy, a move that would likely benefit consumer discretionary spending, including dining out.
The July Consumer Price Index (CPI) rose 2.7% from a year earlier, meeting the previous month's pace and coming in slightly below economists' expectations of a 2.8% increase. On a monthly basis, the CPI rose 0.2%, a slowdown from the 0.3% increase seen in June. While the cost of dining out continued to climb, rising 0.3% in July, this was offset by a 0.1% dip in grocery prices, contributing to the overall stable inflation picture. The market's positive reaction sent major stock indexes, including the Dow Jones Industrial Average, S&P 500, and Nasdaq Composite, soaring. This optimism spilled over into the restaurant sector, which has been grappling with a challenging macroeconomic environment marked by high costs and concerns over consumer traffic.
BJ's is down 12.2% since the beginning of the year, and at $31.51 per share, it is trading 32.6% below its 52-week high of $46.78 from July 2025. Investors who bought $1,000 worth of BJ’s shares 5 years ago would now be looking at an investment worth $853.48.
Unless you’ve been living under a rock, it should be obvious by now that generative AI is going to have a huge impact on how large corporations do business. While Nvidia and AMD are trading close to all-time highs, we prefer a lesser-known (but still profitable) semiconductor stock benefiting from the rise of AI. Click here to access our free report on our favorite semiconductor growth story.
