American Fast-Casual Chains Struggle as Consumers Shift Habits

Fast-casual dining chains in the United States are facing significant challenges as consumer preferences shift. Major players like Cava, Chipotle, and Sweetgreen have reported declining sales and changing customer behaviors, particularly among younger consumers aged 25 to 35. These shifts have led to a noticeable decrease in visits and sales as many individuals opt for more affordable dining options or prepare meals at home.

A recent analysis by restaurant expert Brian Vaccaro from Raymond James highlights that the economic pressures previously affecting lower-income consumers are now impacting middle-income groups as well. Younger diners are increasingly cautious about spending, often avoiding the $15 to $20 price range for their meals. Instead, they are turning to budget-friendly alternatives like grocery shopping or fast-food chains that offer significant discounts.

Cava, known for its customizable Mediterranean bowls, has felt the financial impact. After a remarkable 162% stock increase in 2024, the company’s shares have declined nearly 60% this year. CEO Brett Schulman noted that Gen Z consumers are experiencing unique challenges, including the resumption of student loan repayments and rising unemployment rates, which are notably higher than the national average. Cava’s traffic stagnated for two consecutive quarters, prompting the company to lower its same-store sales forecast from 4% to a projected 3% to 4% for the remainder of 2025.

In the fast-casual sector, overall sales have increased since 2019; however, the number of transactions has decreased by 7%. Schulman emphasized that consumers find the overall cost of dining out to be too high, leading to a shift in their spending habits.

Similarly, Chipotle has experienced a downturn. The company revealed disappointing results in its latest earnings report, prompting a downward adjustment of its sales growth forecast for the third consecutive quarter. Shares have plummeted by 50% this year. CEO Scott Boatwright commented that the decline in consumption among younger customers is significant, noting that this demographic constitutes about 25% of Chipotle’s sales. He stated, “We’re not losing them to the competition; we’re losing them to grocery and food at home.”

Despite concerns about affordability, Boatwright maintains that Chipotle’s pricing remains competitive, with a starting price of under $10 in most markets. He argues that the fast-casual sector as a whole has been perceived as expensive, which has influenced consumer sentiment.

The situation is even more dire for Sweetgreen, a chain once celebrated for its fresh salad options. After experiencing an impressive stock increase of nearly 200% in 2024, Sweetgreen’s shares have dropped 83% this year. The company’s market capitalization has fallen to approximately $680 million, a stark contrast to its nearly $5 billion valuation at the time of its public offering in 2021. In its latest earnings report, Sweetgreen disclosed a 9.5% decline in same-store sales and nearly a 12% drop in customer visits. CFO Jamie McConnell indicated that the 25- to 35-year-old demographic, which represents around 30% of their consumer base, has decreased spending by about 15%.

To regain the attention of price-sensitive customers, Sweetgreen has announced a strategy to increase protein portions by 25%.

Despite the current struggles, industry analysts believe these fast-casual chains are well-positioned for recovery. Brian Vaccaro noted that there remains a strong consumer demand for high-quality, fresh ingredients at reasonable price points. As the dining landscape continues to evolve, these companies may need to adapt further to meet changing consumer expectations and economic realities.