Cava, Chipotle and other fast-casual restaurant chains are finally hit by consumer slowdown
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Cava, Chipotle and other fast-casual restaurant chains are finally hit by consumer slowdown

August 13, 2025
06:51 PM
5 min read
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After bucking industry trends, fast-casual chains like Chipotle and Cava are finally feeling the consumer slowdown.

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August 13, 2025

06:51 PM

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In this HAKWINGSGCAVACMG your favorite stocksCREATE FREE ACCOUNTA customer carries a Cava bag in the Brooklyn borough of New York, US, on Monday, May 6, 2024

Gabby Jones | Bloomberg | Getty ImagesCava stock tumbled 16% in afternoon trading on Wednesday, making it the fast-casual chain to feel Wall Street's wrath after reporting disappointing quarterly sales.A year ago, eateries Chipotle Mexican Grill and Cava were reporting double-digit same-store sales growth, even as the broader restaurant industry posted falling traffic and slumping sales

But times have changed

This spring, fast-casual chains saw foot traffic decline as sales slowed down or even shrank.To explain the downturn, executives have said that diners are "cautious," in the words of Sweetgreen CEO Jonathan Neman, or dealing with an economic "fog," according to Cava CFO Tricia Tolivar.And just as diners are finding reasons why to cut back on their Shake Shack burgers or Chipotle bowls, investors are trimming their fast-casual holdings after rewarding the companies last year for outperforming the rest of the industry

So far in 2025, Shake Shack s have fallen 16%; Chipotle stock has slid 28%; Cava s have tumbled 37%; and Sweetgreen stock has plunged 70%

Of the notable publicly traded fast-casual chains, only Wingstop has managed to stay in the green this year, with gains of 20%.More broadly, investors have grown more cautious betting on any restaurants, given weak traffic trends and concerns consumer spending, according to a re note on Sunday from UBS

Even fast-food companies have struggled with the traffic declines and sluggish sales growth, despite their historical reputation as a safer bet during economic uncertainty.While some fast-casual chains flagged company-specific reasons for their weaker-than-expected results, executives also said that economic uncertainty is weighing on consumers – and hurting their sales.Generally, fast-casual diners are higher income and more ly to have white-collar jobs

However, Chipotle CEO Scott Boatwright blamed a pullback from low-income consumers for the chain's same-store sales declines of 4% in the second quarter."You have to look no further than what's going with our competitors with snack occasions or $5 meals

That's where the consumer is drifting towards, [with] value as a price point, because of low consumer sentiment

I think as sentiment imves, the will imve

I think that's bably the biggest headwind we face," he told analysts on the company's earnings conference call on June 23.The University of Michigan's index of consumer sentiment slid in April to 52.2, one of its lowest-ever recorded readings

It held at that level in May before rising in June to 60.7.Fast-casual chains are seeing consumers' economic anxieties in their own re, too."Through our regular consumer re, we hear concerns elevated prices, future job spects and general anxiety the future," Wingstop CEO Michael Skipworth said on the company's earnings conference call in late July.The chicken wing chain reported same-store sales declines of 1.9% for the quarter, a dramatic reversal compared to its growth of 28.7% in the year-ago period.On the company's earnings conference call on Thursday, Sweetgreen's Neman said that the chain saw "a more cautious consumer environment starting in April" — coinciding with the drop in consumer sentiment

A "subdued industry backdrop," particularly in several of the chain's biggest urban , contributed to Sweetgreen's "really, really rough quarter," according to Neman.That's one reason why the salad chain reported a steeper-than-expected decline in its same-store sales and cut its full-year forecast for the second straight quarter

Sweetgreen executives also attributed the weak quarterly performance to a tough comparison to last year's steak launch and the transition of its loyalty gram.To imve its value perception among customers, Sweetgreen is increasing its chicken and tofu portions by 25%, imving its chicken and salmon recipes and implementing some motional pricing, $13 bowl drops for its loyalty gram members.As for Cava, the company had been wowing investors with impressive same-store sales growth since its initial public offering two years ago

But this quarter, the Mediterranean chain reported same-store sales growth of 2.1%, well below Wall Street jections of 6.1%

Executives said that it faced difficult comparisons to the year-ago period's same-store sales growth of 14.4%, which was fueled by its own steak launch and strong demand at newer restaurant locations that waned this year."Cava isn't so special after all

After blowing out same store sales in Q1 of 10.8%, it fell in line with the industry at 2.1% in Q2

It's not negative, so that's helpful," Tracey Ryniec, stock strategist at Zacks Investment Re, said.Cava executives also acknowledged that economic concerns are weighing on diners."Certainly, we're operating in a fluid macroeconomic environment and it's one that of creates a fog for consumers where things are changing constantly and it's hard to see the

And during those times, they tend to step off of the gas," Tolivar said on the company's conference call on Tuesday evening.Still, Cava isn't seeing consumers trade down to cheaper tein options, or experiencing any other deeper concerns, co-founder and CEO Brett Schulman said

And as it enters the third quarter, its same-store sales have imved, Tolivar said.And Cava isn't the only fast-casual eatery anticipating a return to form in the latter half of the year, especially as consumer sentiment imved in June and July.Chipotle said its traffic started growing again as the burrito chain exited the quarter and continued into July

Sweetgreen has seen "modest" imvement in its same-store sales so far into the third quarter, according to Neman.And while Wingstop executives said that they're still seeing weaker consumer demand, the chain is facing easier comparisons to last year's performance.