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How Chipotle, Wingstop, and Cava Plan to Thrive Amid a Spending Slowdown

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With both the Nasdaq Composite (NASDAQINDEX: ^IXIC) and the S&P 500 index (SNPINDEX: ^GSPC) having fallen into correction territory, there is clearly a lot of fear on Wall Street.

One of the big negatives is that, according to a fairly large number of companies, consumers appear to be facing increasing financial strain. That, in turn, is expected to lead to a spending slowdown.

That's not good news for restaurant companies like Chipotle Mexican Grill (NYSE: CMG), Wingstop (NASDAQ: WING), and Cava Group (NYSE: CAVA). But don't count these still growing companies out.

Where the trouble is going to show up

When consumers are facing financial strain, or sometimes even if they just feel like economic weakness is on the rise, they tend to pull back on spending. Not across the board, of course. There are some products, like consumer staples, that have to be bought no matter what is going on in the economy or in the stock market. Not eating isn't an option. But there are some areas where it is easier to pull back.

Four friends sitting in a restaurant as a group eating food.
Image source: Getty Images.

A good example is the consumer discretionary arena. You can easily put off buying the latest model cellphone or, going back to the food example, not go out to eat quite as often. This is exactly what a lot of restaurants are telling investors to expect. The key metric to watch is same-store sales, which measure sales at restaurants that have been open for at least a year. It provides an indication of how well a company's core business is running.

Chipotle's same-store sales rose 7.4% in 2024, but were up only 5.4% in the fourth quarter of the year. So same-store sales have been softer of late. And the company told investors to expect this metric to fall somewhere in the low- to mid-single-digit range in 2025. So flat to down relative to the fourth quarter's already less impressive number.

Wingstop and Cava basically echoed that sentiment. Wingstop's same-store sales in its U.S. restaurants rose a huge 19.9% in 2024, but it is also guiding for low to mid single digits for 2025. Cava's same-store sales rose 13.4% in 2024. It is expecting same-store sales to fall between 6% and 8% in 2025.

This isn't good news, as it suggests that all three of these growing restaurant concepts are going to have a tough year in 2025. But that doesn't mean they won't be growing. In fact, they might still grow rather impressively.

The biggest growth driver for restaurants

Same-store sales are important, but normally something in the low single digits is considered a good number. Chipotle, Wingstop, and Cava are going from outperforming on this measure to something more pedestrian.