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.<\/p>\n
A year ago, eateries like Chipotle Mexican Grill<\/a> and Cava were reporting double-digit<\/a> 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.<\/p>\n To explain the downturn, executives have said that diners are “cautious,” in the words of Sweetgreen<\/a> CEO Jonathan Neman, or dealing with an economic “fog,” according to Cava CFO Tricia Tolivar.<\/p>\n And just as diners are finding reasons why to cut back on their Shake Shack<\/a> 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%.<\/p>\n 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.<\/p>\n 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 \u2013 and hurting their sales.<\/p>\n 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<\/a> of 4% in the second quarter.<\/p>\n “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.<\/p>\n The University of Michigan’s index of consumer sentiment<\/a> 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.<\/p>\n Fast-casual chains are seeing consumers’ economic anxieties in their own research, too.<\/p>\n “Through our regular consumer research, we hear concerns about elevated prices, future job prospects and general anxiety about the future,” Wingstop<\/a> CEO Michael Skipworth said on the company’s earnings conference call in late July.<\/p>\n 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.<\/p>\n 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” \u2014 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.<\/p>\n