Weiss Ratings sees Cheesecake Factory, Darden and Walmart gaining share as budget-conscious U.S. spending shifts

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Weiss: Retail, restaurant winners

Highlights

The Cheesecake Factory's shares have more than doubled in 2024 as Q3 revenue tops $1 billion with comparable sales up 15.2% and margins at 18.7%.
Darden Restaurants closes at $230.61 with a B rating from Weiss, fueled by 6.8% same-restaurant sales growth at LongHorn Steakhouse and continued consumer resilience.
Walmart finishes at $129.17 with U.S. comparable sales up 2.6% and transaction growth of 1.5%, running over 11,000 price rollbacks to appeal to budget-conscious shoppers.

Consumer spending shifts toward value and small indulgences

As reported by Weiss Ratings, the latest U.S. consumer spending pattern favors companies that capture both value-focused shopping and lower-cost discretionary dining as household budgets remain under pressure.

About 9 in 10 voters say the cost of living is a crucial or major factor in Tuesday's vote for Congress, while roughly 6 in 10 say they are very concerned about food and grocery costs. Weiss says inflation causes severe or moderate hardship for about 8 in 10 households, and notes the University of Michigan's final consumer sentiment reading for October stands at 48.0, down from 53.6 in October 2025.

Fuel costs are easing only gradually. The national average for regular gasoline is about $4.10 a gallon on Thursday, down from $4.37 a month earlier but still above $3.08 a year ago, reinforcing pressure on household budgets even as monthly relief begins to appear.

Weiss argues that consumers are not shutting their wallets entirely when larger purchases become harder to justify. Instead, they are seeking lower prices on staples while preserving spending on smaller treats, a dynamic that is helping certain grocers and restaurant operators take market share.

Restaurant and retail winners draw investor attention

The shift is also showing up in markets. Walmart gains about 3% on Wednesday, Darden Restaurants reaches a new high, and The Cheesecake Factory stands out as one of the year's strongest U.S. stock performers while some AI infrastructure names retreat.

The Cheesecake Factory's shares have more than doubled this year, far outpacing the broader market. Weiss says third-quarter revenue tops $1 billion, a record, while comparable sales at the flagship chain rise 15.2% from a year earlier, driven mainly by a 9.5% increase in guest traffic rather than pricing, with menu price increases contributing 2.4%. Restaurant-level margin at the namesake brand rises to 18.7%, and management plans to open up to 27 new restaurants in 2027.

On the company's Oct. 27 earnings call, Chairman and CEO David Overton says the broad, made-from-scratch menu allows the chain to respond to changing guest preferences across a wide range of price points. Weiss assigns The Cheesecake Factory a B+ rating and calls it the top pick among the stocks discussed.

Darden, which closes Wednesday at $230.61, earns a B rating from Weiss. The firm highlights same-restaurant sales growth of 6.8% at LongHorn Steakhouse in Darden's latest quarter, compared with 1% at Olive Garden, and cites CEO Rick Cardenas saying on the September call that consumers are still spending and remain resilient.

Walmart, which closes Wednesday at $129.17, receives a B- rating. U.S. comparable sales rise 2.6% in its latest quarter, with transactions up 1.5% and outpacing average ticket growth, while the retailer runs more than 11,000 price rollbacks during the quarter. CEO John Furner says Walmart continues to see growth from higher-income households, a sign that trade-down behavior is expanding its customer base.

Weiss is less positive on some other consumer names that rally. McDonald's rises about 6.5% after its earnings beat but holds only a C- rating from the firm, while the State Street Consumer Staples Select Sector SPDR ETF carries a C+ rating. Weiss says individual stock selection offers more upside than broad defensive exposure under current conditions.

Walmart’s inflation-fueled momentum and growing appeal to budget-conscious shoppers were the focus of our earlier coverage, as the retailer continued to capture market share amid cost-of-living pressure. We noted that an analyst upgrade highlighted not only Walmart’s value proposition, but also how automation and faster-growing, higher-margin businesses—along with digital tools like its AI shopping assistant—could support further upside.

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