3 trends are dividing restaurant companies into winners and losers

Restaurant companies navigating some of the same challenges in the second quarter fell into two categories: winners and losers.

Some chains said their higher menu prices alienated diners, while others said consumer behavior hasn’t changed even as their food and drinks grow more expensive. Promotions drove customers to certain restaurants — or fell flat as diners focused on value. And low-income customers visited some restaurants more frequently, but skipped visits at other eateries.

Broadly, foot traffic to restaurants has fallen. Sales growth has slowed as many eateries hold off on another round of the price hikes that drove strong revenue a year ago. Customers have become more selective about how they spend their money, including where they eat, leading to a sharpening divide in chains’ performance.

While most restaurant companies crushed earnings expectations, a number of them fell short of Wall Street’s estimates for their quarterly revenue. McDonald’s and Wingstop both reported second-quarter earnings, revenue and same-store sales growth that topped analysts’ expectations, a rarity this quarter for restaurant companies.

On the other end, Papa John’s, Wendy’s, and Chipotle Mexican Grill were among the flock of companies that disappointed investors with weaker-than-expected sales. All three companies’ stocks haven’t recovered yet.

Here are three trends that defined the quarter and determined its winners and losers:

Two metrics shape a company’s same-store sales growth: how much customers spend on every order, and how often they visit the restaurant chain.

As eateries delay more price hikes and customers watch their wallets, restaurants have to rely on the second benchmark — traffic — to bolster their same-store sales. And Wall Street is watching closely.

“Investors certainly want lots of traffic as a sign of health for the concepts,” TD Cowen analyst Andrew…