Why Consumers Are Abandoning Chipotle, Sweetgreen and Cava

With a loss of 0.02% over the past three months, the S&P 500’s consumer discretionary sector has posted the fourth-worst performance among the index’s 11 sectors. 

While the expected record amount of holiday spending could keep the sector afloat through year’s end, looking forward, there’s no indication that investors should be bullish about this corner of the market as the calendar turns to 2026.

That’s particularly true of fast-casual restaurants, including Chipotle Mexican Grill (NYSE: CMG), salad chain Sweetgreen (NYSE: SG), and relative newcomer Cava (NYSE: CAVA), which specializes in Mediterranean-inspired cuisine. Over the past year, those stocks have been down 48%, 82%, and 60%, respectively. 

As the sector declines amid a backdrop of persistent inflation, shifting consumer sentiment, and a softening labor market, there’s little reason for investors to expect a near- or mid-term rebound for CMG, SG, or CAVA. 

Fast-Casual Restaurants Lose Traffic as Consumer Confidence Wanes

Despite the market’s slow and steady recovery from April’s tariff-induced correction, the consumer discretionary sector remains plagued by consumers’ reactions to higher prices, alongside a weakening job market. 

That’s resulted in strained household budgets and, in turn, weaker consumer confidence. Together, that spells trouble for consumer stocks, with those on the discretionary side of the market having been punished by reduced sales and subsequent earnings and revenue misses. 

When Chipotle reported Q3 earnings on Oct. 29, it announced earnings per share (EPS) of 29 cents, which met analyst expectations, and revenue of $3 billion, which missed analyst expectations. 

Sweetgreen’s Q3 earnings on Nov. 7 were similarly uninspiring. The company’s EPS of -31 cents was a big miss given analyst forecasts of -18 cents, while revenue also fell short. It was the same story for Cava, which on Nov. 4 reported EPS and revenue misses. 

Runaway Menu Prices Push Away Lower-Income Customers

A major pain point is pricing. Once viewed as affordable alternatives to traditional sit-down restaurants, fast-casual chains are now frequently perceived as being too expensive, pushing consumers to more budget-friendly options. 

Chipotle, for instance, charges an average of $13.50 for a bowl with guacamole and premium meat. Factoring in delivery and fees, a single meal can easily exceed $20. Meanwhile, a spicy lamb and avocado bowl from Cava is $15.85, and Sweetgreen’s Power Max Protein Bowl comes in at $22.45.

These prices have contributed to consumer price fatigue, pushing lower-income diners to cheaper alternatives. Chipotle’s Chief Restaurant Officer Scott Boatwright cited “macroeconomic pressures” in the Q3 earnings call but downplayed the role of pricing in declining traffic.

Boatwright pointed out that guests with household incomes below $100,000—who account for approximately 40% of Chipotle’s total sales—are “dining out less often due to concerns about the economy and inflation.” 

While the CEO addressed how the company’s customers are grappling with numerous budget challenges—including “unemployment, increased student loan repayment, and slower real wage growth”— he failed to address cost increases as a significant factor that’s deterring shoppers.

Instead, Boatwright said that “value as a price point is not and will not be a Chipotle strategy,” with the company instead focusing on improving execution, enhancing how value is communicated, and accelerating menu and digital innovation.

Faltering Financials Suggest More Pain Ahead

But digital innovation is unlikely to bring back customers. Until fast-casual restaurant chains address pricing, they’re likely to continue producing disappointing income statements.      

From 2021 to 2024, Chipotle’s revenue growth decreased from more than 26% year-over-year (YOY) to less than 15% YOY.

Over the same period, Sweetgreen’s revenue growth decreased from more than 54% YOY to under 16% YOY. 

Cava, which didn’t go public until June 15, 2023, was the only one of the group to see accelerating revenue growth over the past two years, but the company’s operating cash flow growth declined from about 1,508% YOY in 2023 to 65.83% YOY in 2024. 

This year, all three have been dealing with similar problems. In the first three quarters of 2025, Chipotle posted pedestrian EPS growth of 7.69%, -3.03%, and 3.57%. It was worse for Sweetgreen, whose EPS growth came in at 8.70%, -53.85%, and -72.22% across the first three quarters. And after reporting Q1 EPS growth of 83.33%, Cava followed that performance with -5.88% in Q2 and -20% in Q3. 

Like sharks drawn to blood in the water, Wall Street’s bears have taken note. While Chipotle’s short interest stands at 2.31%—very reasonable, even for a large-cap stock—Sweetgreen and Cava face significantly higher skepticism, with short interest levels at 24.14% and 15.62%, respectively.

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