1、ab10 July 2025Global ResearchPowered byUBS Evidence LabYESUS RestaurantsHow Sustainable Is Casual Dining Momentum?Casual dining momentum could continue near-term,but expect LT moderation Strong casual dining demand continues to surprise us,but could sustain over the coming months given:1)a narrowing

2、 menu price gap to QSR;2)effective promos&sales drivers;3)less exposure to lower income consumers;4)experiential dining out is perhaps less discretionary,5)several sizable brands are meaningfully outperforming;and 6)upcoming comparisons are easy,particularly in July.Additionally,we believe potential

3、 upside to earnings expectations exists across much of the sector.That said,casual dining segment valuations(10 x EV/EBITDA,10-yr avg 9x)likely reflect much of the favorable setup,potentially limiting share upside from here,even as short interest remains elevated across much of the segment(13%,+3 pt

4、s vs Dec 24),creating a potential squeeze dynamic.We expect trends could moderate into 26 against the lap of more difficult compares and w/potentially more competitive&value focused QSR/fast casual segments improving on recently sluggish results.Within casual dining,we favor DRI&TXRH as we believe b

5、oth are positioned to increase market share in any segment backdrop,w/attractive LT growth prospects and compelling total return profiles.Value,service,and other enhancements better position casual diningCasual dining momentum thus far in 25 includes 3%+sss,or 370 bps better than QSR and 360 bps abo

6、ve fast casual,w/segment trends accelerating to a high watermark of 5.2%in June on 2.5%traffic growth.With July comparisons easing 300+bps from June,we expect sizable growth again this month.We anticipate casual dining momentum could continue over the coming months,w/support from better brand positi