Fast-casual restaurants falter in uncertain environment
May 16, 2025
Cava (CAVA) is doing something other fast-casual chains are struggling to do: bringing in customers.
As macro uncertainty persists due to the impact of President Trump’s tariffs, contributing to the second-lowest consumer sentiment reading on record, Cava’s results showed strength.
The Mediterranean-inspired chain reported on Thursday that same-store sales grew 10.8% in the first quarter and foot traffic increased 7.5%. Cava’s better-than-expected sales stood out against warnings of a consumer slowdown from peers like Chipotle (CMG) and Sweetgreen (SG).
The brand aims to “be a port in that uncertainty and inflationary storm for our guests,” Cava CEO Brett Schulman told Yahoo Finance (video above). He added that US consumers are “becoming more selective, but they’re still selecting to choose to eat at Cava.”
Still, Cava stock has experienced similar pressure as shares of peers in recent months and is 44% off its November 52-week high of $172.43. Year to date, shares of Cava are down 14%, while Shake Shack (SHAK), Chipotle, and Sweetgreen have fallen 8%, 13%, and 52%, respectively.
Fast-casual leader Chipotle didn’t have the same luck this past quarter, even though the average cost of its chicken burrito or bowl is around $10 nationally, which is lower than Cava’s average order price of around $14.50.
Chipotle’s same-store sales dropped 0.4% year over year, the first decline since COVID-19 caused the chain to shut stores in the second quarter of 2020. Transactions fell 2.3%, the first decline since 2022.
“We talked to consumers broadly about what is causing them to sit on the sideline in this economy,” Chipotle CEO Scott Boatwright told Yahoo Finance in an interview. “It’s really trying to save money [and] uncertainty around what’s going on with the global economy.”
Read more: What Trump’s tariffs mean for the economy and your wallet
Other fast-casual chains faced similar challenges. Sweetgreen’s same-store sales growth fell 3.1%, which CEO Jon Neman said was “reflective of a broader consumer slowdown.”
Shake Shack saw same-store sales growth of 0.2%, but foot traffic fell 4.6% in the quarter. CFO Katherine Fogertey attributed the lower traffic to “unfavorable weather and broader industry pressures.”
“It’s always a market share battle in restaurants,” William Blair analyst Sharon Zackfia told Yahoo Finance. Zackfia added that “Cava has been winning,” as casual dining options are offering “pretty sharp price points,” allowing them to take share from fast food chains and each other.
It also helps that Cava is a newer concept, experiencing similar growth to that of Chipotle and Starbucks (SBUX) in their early days. For comparison, Cava brought in $331.8 million in revenue in the first quarter versus Chipotle’s $2.8 billion.
Cava reiterated its full-year guidance for 6% to 8% same-store sales growth, which investors weren’t too thrilled about. Though the Street was hoping for a guidance raise, Zackfia remained confident in the company outpacing peers, who have lowered guidance.
She added that 6% growth for the rest of the year is “a very solid result.”
As the full impact of tariffs won’t be realized for several quarters, Cava, Chipotle, and Sweetgreen have all pledged to not raise prices for now.
“I don’t know that there’s a tariff level today that would make us reconsider pricing,” Schulman said. “We’re in this for the long term.”
Schulman added that Cava worked with its suppliers and operations to “absorb” the impact of tariffs, which is “about 20 to 40 basis points,” while maintaining full-year restaurant-level margin guidance of 24.8% to 25.2%.
Chipotle CEO Scott Boatwright told Yahoo Finance in an interview that the company does not plan to raise prices “anytime in the near future,” given the state of the consumer. However, he said that the company would “evaluate the full impact before deciding if [tariffs are] a permanent hit to the business.”
Cava’s and Chipotle’s “very healthy margins” help them absorb higher costs, Zackfia said.
“When you think about having a 25% or better level margin, you can eat a little bit of inflation, or you can look for other efficiencies to offset it,” Zackfia said.
Sweetgreen CFO Mitch Reback also told investors the chain does not anticipate “any price increases for the remainder of the year.”
Shake Shack’s CFO, striking a different tone, said the company plans to raise prices by approximately 3% across all channels.
Brooke DiPalma is a senior reporter for Yahoo Finance. Follow her on X at @BrookeDiPalma or email her at bdipalma@yahoofinance.com.
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