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Investing.com -- Redburn Atlantic downgraded McDonald’s (NYSE:MCD) and launched coverage of Domino’s with a Sell rating, warning that changing consumer behavior from weight-loss drugs and pricing fatigue are emerging as significant long-term threats to the U.S. restaurant sector.
While structural tailwinds have historically supported restaurant growth, Redburn said cracks have begun to emerge as drugs like GLP-1s suppress appetites and reshape how and when people eat.
The firm cautioned that even a small impact now could build over time, with a 1% demand drag today potentially compounding to 10% or more.
These changes extend beyond individual users, the analysts wrote, citing effects on group dining, family routines and habitual consumption patterns.
Redburn also flagged persistent traffic weakness, with the sector seeing monthly declines in 40 of the past 43 months.
Consumers are showing signs of fatigue after several years of sharp menu price increases, while the cost gap between eating out and cooking at home remains historically wide.
The firm warned that renewed inflation, particularly from tariffs, could place further pressure on already stretched U.S. consumers and hurt brands with limited pricing flexibility.
Redburn downgraded McDonald’s to Sell from Buy, citing concerns about growth sustainability and vulnerability to both economic and behavioral headwinds. It also initiated coverage on Domino’s U.S. at Sell.
Though the firm upgraded Yum! Brands (NYSE:YUM) to Buy, citing more conservative expectations, international exposure and reasonable valuation.
Coverage on Chipotle (NYSE:CMG) was initiated at Neutral.
