Consumers are still going out to eat with family, but they're cutting back on fast meals. Brian Harbour, Morgan Stanley equity analyst, discusses the bifurcations in the world's largest restaurant stocks and his thoughts on Chipotle.

Morgan Stanley restaurant and food distribution analyst Brian Harbour reports that consumers are increasingly opting for full-service dining over fast food or quick service options. Harbour attributes this trend to a desire for more meaningful dining experiences, particularly with family and friends, and notes that transactional meals such as workday lunches are being replaced or reduced.

Harbour highlights that while some fast casual chains like Chipotle have faced challenges, they continue to show strong fundamentals such as value, new store openings, and solid margins. He also addresses the recent performance of Cava, attributing its stock volatility to high expectations rather than operational issues, and suggests that the company is still performing well despite market adjustments.

Consumers are cutting back on fast meals: Morgan Stanley's Harbour

Helping us to make sense of this Morgan Stanley restaurant and food distribution analyst Brian Harbor Brian You know the cabas of the world aside. We can get to that specifically in a moment How do we explain why one stock is up so much the other one is down is just execution consumer taste Well, the truth is full service notwithstanding blooming as you just showed full service is actually doing pretty well, right, right Why is that I think somewhat people are still going out to eat. They're still looking for experiences There's a little bit of a bifurcated economy here, right? I think where that higher indication is doing okay versus you might think of more of the transactional stuff I think that's still pretty tough. That was that's been visible here through earnings Yeah People are I mean salads and cabas side are so you people are moving Away from what they call fast food or quick service to sit down Is that because if a couple bucks extra they can feel like they're having a real sit-down meal The I think that's part of what it is, right people still want to go out with family and friends Quick service is always a little more transactional, right? It's more dependent on a workday lunch. You can very easily replace it at home I think the message is, you know, people aren't cutting out on that meal where they go out with their family But if you you know go to Starbucks a little bit less often if you buy, you know fewer salads during the workday I think that's kind of what it is, you know in this economy. This was the reality of it in your coverage universe Brian Listen, I see stocks down 70% I think maybe there's an opportunity there things either stop going down or they turn around Are there any stocks you love right now? We like Chipotle right Chipotle's had a tough year so far and they were they had negative same-store sales in the 2q, right? Some of those just comparison issues things have absolutely slowed, right? That's been true across a lot of this fast casual landscape But when you think about a company it still has very good value still opening new stores that are performing Well still has very good margins. I mean, I think the story is still very good for Chipotle But what happened at Cabo? There's one thing to quote Chipotle of Mediterranean Well, look, this is a bit of an expectations mess, right? It was an expensive stock very high expectations before those have just come in a bit, right? Nothing's really going wrong They're opening very strong new restaurants. Actually, if you look at earnings, it was a little bit ahead of our estimates yesterday So I don't there's anything off-track here, but some of the growing pain some of the expectations and mismatch You just have to work through that. I think that's really what it was today

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