Spotting Winners: CAVA (NYSE:CAVA) And Modern Fast Food Stocks In Q3

Wrapping up Q3 earnings, we look at the numbers and key takeaways for the modern fast food stocks, including CAVA (NYSE:CAVA) and its peers.

Modern fast food is a relatively newer category representing a middle ground between traditional fast food and sit-down restaurants. These establishments feature an expanded menu selection priced above traditional fast food options, often incorporating fresher and cleaner ingredients to serve customers prioritizing quality. These eateries are capitalizing on the perception that your drive-through burger and fries joint is detrimental to your health because of inferior ingredients.

The 7 modern fast food stocks we track reported a slower Q3. As a group, revenues missed analysts’ consensus estimates by 0.9%.

While some modern fast food stocks have fared somewhat better than others, they have collectively declined. On average, share prices are down 4.8% since the latest earnings results.

CAVA (NYSE:CAVA)

Starting from a single Washington, D.C. location, CAVA (NYSE:CAVA) operates a fast-casual restaurant chain offering customizable Mediterranean-inspired dishes.

CAVA reported revenues of $292.2 million, up 19.9% year on year. This print was in line with analysts’ expectations, but overall, it was a slower quarter for the company with full-year EBITDA guidance missing analysts’ expectations and a slight miss of analysts’ same-store sales estimates.

CAVA scored the fastest revenue growth of the whole group. Still, the market seems discontent with the results. The stock is down 2.7% since reporting and currently trades at $49.35.

Read our full report on CAVA here, it’s free for active Edge members.

Best Q3: Shake Shack (NYSE:SHAK)

Started as a hot dog cart in New York City's Madison Square Park, Shake Shack (NYSE:SHAK) is a fast-food restaurant known for its burgers and milkshakes.

Shake Shack reported revenues of $367.4 million, up 15.9% year on year, outperforming analysts’ expectations by 1%. The business had a very strong quarter with a solid beat of analysts’ same-store sales estimates and an impressive beat of analysts’ EBITDA estimates.

The market seems content with the results as the stock is up 2.7% since reporting. It currently trades at $92.35.

Is now the time to buy Shake Shack? Access our full analysis of the earnings results here, it’s free for active Edge members.

Weakest Q3: Sweetgreen (NYSE:SG)

Founded in 2007 by three Georgetown University alum, Sweetgreen (NYSE:SG) is a casual quick service chain known for its healthy salads and bowls.

Sweetgreen reported revenues of $172.4 million, flat year on year, falling short of analysts’ expectations by 3.1%. It was a disappointing quarter as it posted full-year revenue guidance missing analysts’ expectations significantly and full-year EBITDA guidance missing analysts’ expectations.

Sweetgreen delivered the highest full-year guidance raise but had the slowest revenue growth in the group. As expected, the stock is down 16.5% since the results and currently trades at $5.22.

Read our full analysis of Sweetgreen’s results here.

Noodles (NASDAQ:NDLS)

Offering pasta, mac and cheese, pad thai, and more, Noodles & Company (NASDAQ:NDLS) is a casual restaurant chain that serves all manner of noodles from around the world.

Noodles reported revenues of $122.1 million, flat year on year. This result topped analysts’ expectations by 1.9%. It was a very strong quarter as it also logged a solid beat of analysts’ EBITDA estimates and an impressive beat of analysts’ revenue estimates.

Noodles achieved the biggest analyst estimates beat but had the weakest full-year guidance update among its peers. The stock is up 8.3% since reporting and currently trades at $0.72.

Read our full, actionable report on Noodles here, it’s free for active Edge members.

Portillo's (NASDAQ:PTLO)

Begun as a Chicago hot dog stand in 1963, Portillo’s (NASDAQ:PTLO) is a casual restaurant chain that serves Chicago-style hot dogs and beef sandwiches as well as fries and shakes.

Portillo's reported revenues of $181.4 million, up 1.8% year on year. This number missed analysts’ expectations by 0.7%. Zooming out, it was actually a strong quarter as it produced a beat of analysts’ EPS estimates and a solid beat of analysts’ same-store sales estimates.

The stock is down 10.2% since reporting and currently trades at $4.71.

Read our full, actionable report on Portillo's here, it’s free for active Edge members.

Market Update

Thanks to the Fed’s rate hikes in 2022 and 2023, inflation has been on a steady path downward, easing back toward that 2% sweet spot. Fortunately (miraculously to some), all this tightening didn’t send the economy tumbling into a recession, so here we are, cautiously celebrating a soft landing. The cherry on top? Recent rate cuts (half a point in September 2024, a quarter in November) have propped up markets, especially after Trump’s November win lit a fire under major indices and sent them to all-time highs. However, there’s still plenty to ponder — tariffs, corporate tax cuts, and what 2025 might hold for the economy.

Want to invest in winners with rock-solid fundamentals? Check out our Top 5 Growth Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.

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