Cava stock tumbled 16% in afternoon trading on Wednesday, making it the latest fast-casual chain to feel Wall Street’s wrath after reporting disappointing quarterly sales.
A year ago, eateries like 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 shares have fallen 16%; Chipotle stock has slid 28%; Cava shares 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 about betting on any restaurants, given weak traffic trends and concerns about consumer spending, according to a research 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 likely 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 improves, the business will improve. I think that’s probably 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 research, too.
“Through our regular consumer research, we hear concerns about elevated prices, future job prospects and general anxiety about 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 markets, 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 program.
To improve its value perception among customers, Sweetgreen is increasing its chicken and tofu portions by 25%, improving its chicken and salmon recipes and implementing some promotional pricing, like $13 menu bowl drops for its loyalty program 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 projections 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 Research, 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 sort of creates a fog for consumers where things are changing constantly and it’s hard to see the clear. 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 protein options, or experiencing any other deeper business concerns, co-founder and CEO Brett Schulman said. And as it enters the third quarter, its same-store sales have improved, 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 improved 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” improvement 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.
