5 days ago
Chipotle, Cava, and Sweetgreen results reveal a challenging summer for America's favorite office lunch spots
The second quarter was a tough period for some of America's favorite office lunch spots.
Cava stock fell 16% on Wednesday after the company reported a larger-than-expected growth slowdown in the second quarter. Peers like Sweetgreen (SG) and Chipotle (CMG) both reported a second straight quarter of same-store sales declines in Q2 as demand for the trusty lunch bowls of choice for America's white-collar workforce waned.
"We do see what I would classify as a macroeconomic fog around the consumer that they're trying to navigate through, and that has the consumer less front-footed, less ebullient, less forward-leaning than they were, say, this time last year," Cava CEO Brett Schulman told Yahoo Finance on Wednesday.
Same-store sales at Cava rose 2.1% in the second quarter, a deceleration from the double-digit growth seen in each of the prior three quarters. Analysts had expected the company to post same-store sales closer to 6%.
At Chipotle, same-store sales fell 4% in the second quarter, a larger drop than the 2.3% fall seen in the year's first quarter.
CEO Scott Boatwright told investors it was due to "ongoing volatility in our trends in the consumer environment," which prompted the company to cut its full-year same-store sales forecast.
Sweetgreen posted the steepest decline among the three, with same-store sales falling 7.6% in the quarter.
Co-founder and CEO Jonathan Neman said it was "pretty obvious that the consumer is not in a great place overall" on a call with investors.
The "pressure on consumer spending for many of our consumers has persisted longer than we expected," he added. Shares of the salad chain fell more than 20% on the news.
Shares of Chipotle are down more than 25% this year, while Cava stock has lost over 35%. Sweetgreen stock has fallen nearly 70%.
A challenge for these chains, in part, is lapping a strong 2024.
"The backdrop of the restaurant environment has not changed that dramatically since last year," Bank of America analyst Sara Senatore said, noting these fast-casual players "can't take massive share every year."
At Cava, Schulman said the current quarter has shown signs of a pickup in sales and that the company is "encouraged by what we're seeing in the exit rate of the quarter."
Still, all three brands are considering a mix of more carefully curated menus and emphasizing value in an effort to win back sales at a time when consumers seem keen to scrutinize their budgets more closely.
Cava, for instance, is introducing chicken shawarma in September and cinnamon sugar pita chips later on this year, as well as testing salmon. Sweetgreen announced plans to stop selling the ripple fries it rolled out just five months ago.
"We've got to figure out a way we can communicate value for the consumer and showcase the value we are to QSR and fast casual," Chipotle's Boatwright said. "There's more work to do there, and that's what we'll lean into in the back half of the year."
Brooke DiPalma is a senior reporter for Yahoo Finance. Follow her on X at @BrookeDiPalma or email her at bdipalma@
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