We see them every day — at the drive-through, on delivery apps, and in prime-time ads. Fast food brands are some of the most recognisable in the world, and a few have created exceptional wealth for long-term investors.
But in 2025, that story has hit a speed bump. Some of the most familiar names in global fast food are losing momentum on the market, even as their sales keep rising..
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A global cool-down
The Chipotle Mexican Grill share price has shed around 43% over the past year, Wendy's has fallen 54%, and Starbucks is down over 17% in the same time frame.
On the surface, those numbers might sound like the market has lost its appetite for fast food. Yet, all three companies have increased revenue over the same period and continued a steady upward sales trajectory over five years.
So what's going on?
The answer lies in valuation, not appetite. Following the pandemic boom — when delivery apps, stimulus spending, and reopening momentum supercharged growth — investors bid up these names to lofty multiples.
As spending patterns normalised and growth plans cooled, those stretched valuations are being brought back to earth.
It's not that the burgers, burritos, and frappacinos stopped selling. It's that the market has stopped paying a premium for perfection and infinite growth projections.
The Australian equivalents
A similar story is playing out on the ASX. Local investors have had a taste of both hype and humility this year through Guzman Y Gomez Ltd (ASX: GYG), Domino's Pizza Enterprises Ltd (ASX: DMP), and Collins Foods Ltd (ASX: CKF).
Guzman y Gomez burst onto the ASX in June 2024 in one of Australia's biggest IPOs in years. Its share price initially rocketed more than 50% before falling back to earth, now down over 30% in the past year. The sell-off reflects a mismatch between early expectations and near-term execution, with comparable sales growth moderating and the stock attracting heavy short interest.
Still, the long-term outlook remains promising. Guzman continues to expand both domestically and internationally, targeting hundreds of new stores over the next decade. Analysts at Macquarie and Morgans maintain optimistic views, with price targets implying a 20% to 26% upside from current levels, citing the brand's growing market share and scalable business model.
Domino's, a former ASX high flyer, tells the other side of the cycle. The company's tech-enabled delivery systems and international footprint once helped it compound steadily for years. But slowing sales and restructuring challenges saw the stock lose more than 50% in a year, marking its first annual loss since 2005.
Recently, sentiment has begun to turn. Speculation of a potential takeover bid saw the share price rebound more than 30% in recent months, a reminder of the enduring strategic appeal of its global franchise network. Management has reiterated a plan to make the business "leaner, more efficient", with cost savings aimed at supporting franchise partners and reigniting growth.
Meanwhile, Collins Foods has quietly outperformed both peers and the broader market. The operator of KFC and Taco Bell restaurants has delivered a 25% share price gain over the past 12 months, supported by solid Australian sales and accelerating growth in Europe.
Recent updates showed sales up 6.7% year on year, with strong same-store growth across Germany and the Netherlands. Analysts forecast low to mid-teens earnings growth into FY26, with the business valued at roughly 22 times forward earnings — a reasonable price for a company expanding its global footprint and refining its franchise model.
Foolish Takeaway
The fast food sector, whether in New York or on the ASX, hasn't lost its flavour. What's changed is the market's appetite for paying premium multiples.
While short-term sentiment remains mixed, these businesses continue to grow, innovate, and adapt to consumer demand. For patient investors, overly pessimistic valuation resets like these can place unique opportunities for the next decade of compounding.
