A potential takeover of burrito bowl king Chipotle by coffee chain Starbucks has many scratching their heads over possible synergies. But it still sent Chipotle stock up 6% Thursday. And what's good for Chipotle is good for other so-called "lunch stocks."
Jersey Mike's, Shake Shack, Sweetgreen, and Cava all saw substantial gains of 5.6%, 4.9%, 4.5%, and 4.3%, respectively. The thinking is that interest in Chipotle could also be positive for its biggest rivals in the fast casual sector.
It's been a tough year for restaurant stocks as they struggle with everything from higher prices for their ingredients to customers shunning them amid a focus on GLP-1 induced weight loss and healthier eating.
That backdrop has put a damper on sandwich chain Jersey Mike's, which debuted back in July and whose stock is still trading below its $23 IPO price. Even with Thursday's bounce, it's down from that by about 25%.
The Chipotle report may not be the only thing moving restaurant stocks higher on Thursday. Cava, for instance, got a boost from Melius Research upgrading it from Buy to Hold with a $95 price target.