By Doug Busch

After being off the menu for many investors, casual dining stocks may be poised for a comeback.

An M&A announcement on Sept. 10 provided a first sign of hope when Potbelly stock surged after the company said it had agreed to be acquired by RaceTrac. More recently Cracker Barrel dropped 8% following an earnings miss Thursday, while names like Wingstop, Sweetgreen, and Jack in the Box continue to trade 40% to 80% below their 52-week highs, reminding investors that not all casual dining stocks are out of the woods just yet.

However the charts of a few other companies in the space are starting to look constructive.

Cheesecake Factory, once considered a best-in-breed restaurant stock, is up 16% year to date but still trades 21% below its 52-week high from July 23. This week CAKE is flirting with its first five-week losing streak since late 2022.

The stock is testing support at its 200-day simple moving average however, and on Thursday ended a rare 10-session losing streak. Bulls will want to see this long-term trend line act as a launchpad rather than a rest stop like it did in early April.

If the support holds, it could form a double bottom base with a potential trigger at $64.14. A long position here could be justified with a stop at $51, just below recent lows.

Cheesecake Factory was trading around $55.01 Friday.

Darden Restaurants, parent of Olive Garden and other chains, dropped 8% on Thursday in a rare post earnings slip. That was the first negative reaction to earnings in its last six reports, and the largest daily decline in more than three years. The stock is now well below its 200-day SMA for the first time in 13 months.

Zooming out to the weekly chart, a potential downside target sits near the $175 level, which would be a retest of the 18-month ascending triangle breakout. DRI originally cleared that threshold with conviction in the week ending Dec. 20, when it rallied more than 12%. That former resistance zone could now act as strong support if touched.

Darden Restaurants traded at $186.63 Friday.

Cava Group, like CAKE a one-time casual dining darling, may be poised for another rally. The stock ran nearly 500% from November 2023 to November 2024, but has since cooled off. It now trades 64% off its all-time high that followed an earnings reversal on Nov. 13.

More recently, it's showing early signs of stabilization. On the weekly chart below, the last few candles suggest selling pressure is abating, with two spinning tops and a doji three of the last four weeks. These are all classic signals of possible trend reversal.

Adding to the bullish narrative, CAVA now trades near a former cup base breakout level at $58.20, cleared in early March 2024. That area could offer strong support and a logical area for a rebound to begin.

Cava Group was trading around $63.34 Friday.

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

September 19, 2025 11:21 ET (15:21 GMT)

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