There’s really no other way to put it: 2025 was a bad year for the food industry. Higher costs, a weaker consumer, and even the noise of tariffs in the spring all posed challenges. Equity prices reflect those challenges: many more companies saw their share prices hit multi-year lows than multi-year highs. Major industry players like Pepsi, Chipotle, and Wendy’s saw massive declines in their share prices.
2026 is bound to be better.
Consumers do still seem stretched, but year-prior comparisons should improve growth rates for many food industry players this year. Inflation has moderated; importantly, companies have had more time to adapt to what may be a ‘new normal.’ But perhaps the best piece of news as the calendar turns is that it seems unlikely things can get much worse.
CPG Manufacturers
For consumer packaged goods manufacturers, 2025 performance was dismal even by the standards of a disappointing multi-year run. For the major players, the year was close to a disaster.
Kraft Heinz touched a three-year low, and already in 2026 it is threatening record lows reached in 2020. General Mills closed the year at its lowest levels since 2019; a lowered profit outlook in October sent Hormel to a twelve-year low. Campbell stock has been crushed: as of this writing, it trades at levels not seen since May 2009, during the financial crisis.
And those performances are different from the space as a whole only in degree, not in kind: incredibly, not a single food manufacturer with a market capitalization over $500 million posted positive performance across the entirety of 2025. (The two bright spots came from the former Kellogg: Kellanova and W.W. Kellogg both were acquired at a premium, with both deals closing before year-end.)
The space has struggled for years. Even with dividends, investors in Hormel, Campbell, and Kraft Heinz are down at least 27% over the past decade.
General Mills has provided a total return of less than 10%. This year doesn’t look any better: each of the four names is down at least 3.9% in the first week of 2026. And, at this point, it’s difficult to see how that changes.
Food manufacturers have tried to adapt in numerous ways, whether by focusing on costs, moving into new markets, or breaking up. None of those strategies have yet worked; to be blunt, none has come close to working.
At this point, the problem simply is structural: in a market with more fragmentation in both suppliers and tastes, widely-known consumer brands simply are not as valuable as they once were. So far, manufacturers haven’t figured out how to overcome that problem, and already in 2026 investors seem to believe they’re not going to do so any time soon. The bottom so far does not appear to be in.
Food Retailers
On the retail side of the equation, the news isn’t quite as dark, but 2025 too was a tough year. Walmart continues to prosper: its shareholders beat the market with a 24% gain and very little stress along the way (save for some brief worries around ‘Liberation Day’ tariffs in early April). In the rest of the grocery industry, however, returns for the year were negative (even excluding Target, whose broad struggles led its stock to a six-year low).
But as opposed to food manufacturers, for food retailers 2025 was not a continuation of a long-term trend. Most players have done well for the decade; in context, last year looks more like a breather from the market than a sign of real trouble to come. This is most obvious for Costco, which posted returns of negative 6% last year; the issue there clearly was valuation (Costco had become by profit metrics perhaps the most expensive large-cap non-tech stock in the market) rather than performance.
Similarly, the two major natural grocers, Sprouts Farmers Market and Natural Grocers by Vitamin Cottage, saw their stocks plunge in the second half of the year. Yet, even though each has fallen around 60% from last year’s peak, both have still more than tripled so far this decade.
Both stocks have a strong case for a bounce-back in 2026; the underlying businesses in each still seem strong (and both have more share to take and more stores to open). There’s about a half-century of evidence to suggest investors can’t go wrong owning Walmart.
Elsewhere in the industry, however, the outlook is murkier. Can Kroger keep competing with Walmart? Can Target and Albertsons start improving their results after several years of disappointment? How can independent grocers find a niche in a world where scale and reach seem to matter more each day?
Unlike in packaged foods, there are structural tailwinds for the industry: most notably, growing third-party delivery sales and potential advertising revenue. But there are enough challenges — including a still-cautious consumer — to suggest that company execution rather than industry conditions is likely to be the major determination of 2026 performance.
Restaurants
For the foodservice industry, 2025 was mostly a year to survive. In fast food, an industry which should in theory benefit from consumer challenges, the news was mostly good if hardly spectacular. Yum! Brands, for example, continues to drive strength in Taco Bell, which pushed its stock up over 15% including dividends.
McDonald’s and Restaurant Brands International (the owner of Burger King, Tim Hortons, and Popeyes), eked out 8% and 9% total returns, respectively. The industry’s smaller players, however, couldn’t keep pace: Wendy’s and Jack in the Box saw total returns in the range of negative 50%. Each stock (excluding very brief panic trading in March 2020) is at decade-plus-lows.
Given a volatile external environment, casual dining held up rather well. Industry leaders like Brinker, Darden, and Cheesecake Factory eked out gains. (Brinker deserves extra credit for proving that its turnaround, which led the stock to triple in 2024, isn’t a mirage.) Long-struggling Dine Global, owner of Applebee’s and IHOP, stemmed a multi-year bear run, but Outback Steakhouse owner Bloomin’ Brands couldn’t do the same (shares hit an all-time low).
The biggest news, however, was in fast casual.
Catalyzed in part by a series of stunning earnings reports last summer, investor sentiment toward the fast-casual sector has absolutely collapsed.
Chipotle stock declined 39%, its worst year since 2008. Shake Shack did about the same; growth darling Cava was nearly halved; and Sweetgreen completed an incredible roller coaster (starting in November 2021, the stock went from $50 to $6 to $45 and then back to $6).
The good news for that group in 2026 is that investors already are seeing potential value: Shake Shack and Sweetgreen both are up 12% year-to-date, while Cava has bounced 16% and Chipotle almost 6%. The hope clearly is that 2025 was simply a transition year, a bump in the road for a group that continues to take market share. That may be true for the industry as a whole: here, too, 3P delivery provides a potential tailwind to growth, as comparing against more difficult 2025 performance may make quarterly earnings in 2026 look stronger.
Foodservice Distributors
At a high level, 2025 was not a particularly impressive year for the ‘Big Three’ foodservice distributors. Even including dividends, Sysco shareholders lost about 1% in 2025; the market leader continues to play catch-up with its smaller rivals. Those rivals — US Foods (+11%) and Performance Food Group (+7%) — fared better, but each lagged the 17% total return in the Standard & Poor’s 500 index.
In context, however, investors probably aren’t too upset with how the stocks and the underlying businesses performed. As seen above, 2025 was not a good year for the industry’s end customers, with consumer sentiment and inflation pressuring away-from-home demand. Despite lower-than-usual growth rates, clearly the big three players continue to take share, as they have for more than two decades now.
As long as that trend continues, foodservice distributors should continue to be stocks worth owning. They haven’t kept pace with the broad market over the past decade, but the group on average still has delivered 200%-plus total returns, and lagging the index in a concentrated, tech-driven bull market is neither a disappointment nor a surprise.
With merger talks between US Foods and PFG apparently over, and Sysco still working on something of a turnaround, the focus should continue to be on market share gains and tuck-in acquisitions. The last ten years — at least — plus a stabilizing away-from-home market suggest that focus is likely to drive solid performance from these three stocks again.
Vince Martin is an analyst and author whose work has appeared on multiple financial industry websites for more than a decade; he’s currently the lead writer for Wall Street & Main. He has no positions in any securities mentioned.
Food for Thought Leadership
This Episode is Sponsored by: Koelnmesse
Snacking in the U.S. has been on the rise for many years, but is this a global phenomenon? Sabine Schommer, Director, ISM, and Guido Hentschke, Director, ProSweets Cologne and ISM Ingredients, explore European and global snacking trends, and how the trio of ISM, ISM Ingredients, and ProSweets Cologne serve as a meeting place for the global snacking industry.
