Cava stock tumbled 16% in afternoon trading on Wednesday, making it the latest fast-casual chain to feel Wall Street’s wrath after reporting disappointing quarterly sales.

A year ago, eateries like Chipotle Mexican Grill and Cava were reporting double-digit same-store sales growth, even as the broader restaurant industry posted falling traffic and slumping sales. But times have changed. This spring, fast-casual chains saw foot traffic decline as sales slowed down or even shrank.

To explain the downturn, executives have said that diners are “cautious,” in the words of Sweetgreen CEO Jonathan Neman, or dealing with an economic “fog,” according to Cava CFO Tricia Tolivar.

And just as diners are finding reasons why to cut back on their Shake Shack burgers or Chipotle bowls, investors are trimming their fast-casual holdings after rewarding the companies last year for outperforming the rest of the industry. So far in 2025, Shake Shack shares have fallen 16%; Chipotle stock has slid 28%; Cava shares have tumbled 37%; and Sweetgreen stock has plunged 70%. Of the notable publicly traded fast-casual chains, only Wingstop has managed to stay in the green this year, with gains of 20%.

More broadly, investors have grown more cautious about betting on any restaurants, given weak traffic trends and concerns about consumer spending, according to a research note on Sunday from UBS. Even fast-food companies have struggled with the traffic declines and sluggish sales growth, despite their historical reputation as a safer bet during economic uncertainty.

While some fast-casual chains flagged company-specific reasons for their weaker-than-expected results, executives also said that economic uncertainty is weighing on consumers – and hurting their sales.

Generally, fast-casual diners are higher income and more likely to have white-collar jobs. However, Chipotle CEO Scott Boatwright blamed a pullback from low-income consumers for the chain’s same-store sales declines of 4% in the second quarter.

“You have to look no further than what’s going with our competitors with snack occasions or $5 meals. That’s where the consumer is drifting towards, [with] value as a price point, because of low consumer sentiment. I think as sentiment improves, the business will improve. I think that’s probably the biggest headwind we face,” he told analysts on the company’s earnings conference call on June 23.

The University of Michigan’s index of consumer sentiment slid in April to 52.2, one of its lowest-ever recorded readings. It held at that level in May before rising in June to 60.7.

Fast-casual chains are seeing consumers’ economic anxieties in their own research, too.

“Through our regular consumer research, we hear concerns about elevated prices, future job prospects and general anxiety about the future,” Wingstop CEO Michael Skipworth said on the company’s earnings conference call in late July.

The chicken wing chain reported same-store sales declines of 1.9% for the quarter, a dramatic reversal compared to its growth of 28.7% in the year-ago period.

On the company’s earnings conference call on Thursday, Sweetgreen’s Neman said that the chain saw “a more cautious consumer environment starting in April” — coinciding with the drop in consumer sentiment. A “subdued industry backdrop,” particularly in several of the chain’s biggest urban markets, contributed to Sweetgreen’s “really, really rough quarter,” according to Neman.

That’s one reason why the salad chain reported a steeper-than-expected decline in its same-store sales and cut its full-year forecast for the second straight quarter. Sweetgreen executives also attributed the weak quarterly performance to a tough comparison to last year’s steak launch and the transition of its loyalty program.

To improve its value perception among customers, Sweetgreen is increasing its chicken and tofu portions by 25%, improving its chicken and salmon recipes and implementing some promotional pricing, like $13 menu bowl drops for its loyalty program members.

As for Cava, the company had been wowing investors with impressive same-store sales growth since its initial public offering two years ago. But this quarter, the Mediterranean chain reported same-store sales growth of 2.1%, well below Wall Street projections of 6.1%. Executives said that it faced difficult comparisons to the year-ago period’s same-store sales growth of 14.4%, which was fueled by its own steak launch and strong demand at newer restaurant locations that waned this year.

“Cava isn’t so special after all. After blowing out same store sales in Q1 of 10.8%, it fell in line with the industry at 2.1% in Q2. It’s not negative, so that’s helpful,” Tracey Ryniec, stock strategist at Zacks Investment Research, said.

Cava executives also acknowledged that economic concerns are weighing on diners.

“Certainly, we’re operating in a fluid macroeconomic environment and it’s one that sort of creates a fog for consumers where things are changing constantly and it’s hard to see the clear. And during those times, they tend to step off of the gas,” Tolivar said on the company’s conference call on Tuesday evening.

Still, Cava isn’t seeing consumers trade down to cheaper protein options, or experiencing any other deeper business concerns, co-founder and CEO Brett Schulman said. And as it enters the third quarter, its same-store sales have improved, Tolivar said.

And Cava isn’t the only fast-casual eatery anticipating a return to form in the latter half of the year, especially as consumer sentiment improved in June and July.

Chipotle said its traffic started growing again as the burrito chain exited the quarter and continued into July. Sweetgreen has seen “modest” improvement in its same-store sales so far into the third quarter, according to Neman.

And while Wingstop executives said that they’re still seeing weaker consumer demand, the chain is facing easier comparisons to last year’s performance.

The post Cava, Chipotle, Sweetgreen report slower sales appeared first on Our Story Insight.

Jerome H. Powell, the chair of the Federal Reserve, warned that President Trump’s tariffs risk stoking even higher inflation and slower growth than initially expected, as he struck a more downbeat tone about the outlook, despite the economy so far remaining in a “good place.”

“While uncertainty remains elevated, it is now becoming clear that the tariff increases will be significantly larger than expected,” he said. “The same is likely to be true of the economic effects, which will include higher inflation and slower growth.”

Mr. Powell characterized the risks of that outcome, which he warned could include higher unemployment, as “elevated.”

“While tariffs are highly likely to generate at least a temporary rise in inflation, it is also possible that the effects could be more persistent,” he said in a speech at a conference in Arlington, Va., on Friday.

“Avoiding that outcome would depend on keeping longer-term inflation expectations well anchored, on the size of the effects, and on how long it takes for them to pass through fully to prices,” he said. Higher inflation stemming from tariffs could show up “in the coming quarters,” he said.

Mr. Powell added that the Fed’s “obligation” was to ensure that a “one-time increase in the price level does not become an ongoing inflation problem.”

His comments cap off a tumultuous week after Mr. Trump jolted the world with shock-and-awe tariffs that risk setting off an inflation surge and a sharp economic downturn. Financial markets across the globe have tumbled as the reality of the president’s plans begin to set in.

The rout continued on Friday, with the S&P 500 down around 4 percent, following China’s decision to retaliate with 34 percent tariffs on U.S. goods and comments from Mr. Trump and his economic advisers seeking to dismiss the potential economic pain.

Minutes before Mr. Powell’s speech, the president went on Truth Social and called on the Fed chair to lower interest rates as he attacked him for being “always ‘late.’”

“This would be a PERFECT time for Fed Chairman Jerome Powell to cut Interest Rates. He is always “late,” but he could now change his image, and quickly,” Mr. Trump wrote. “CUT INTEREST RATES, JEROME, AND STOP PLAYING POLITICS!”

In a moderated discussion after his speech, Mr. Powell acknowledged that the combination of higher unemployment and higher inflation would be “difficult” for the Fed to navigate given its dual goals of fostering a healthy labor market and low, stable inflation.

“If we find ourselves in that situation, we look at how far each of the two variables is from its goal, and we ask ourselves, ‘How long would it take to get back?’ And we weigh those things and make a decision about what to do,” he said. Mr. Powell added that the two goals were not in “tension” right now.

He also stressed that the Fed was “strictly nonpolitical.”

“We try to stay as far as we can from the political process,” he said. People “expect us to tell the truth, and that’s what we’re going to do.”

The magnitude of the global trade war that is brewing creates complications for the Fed, which has been trying since the pandemic to bring inflation back down to its 2 percent target while avoiding a recession. Just a couple of months ago, the prospects of this so-called “soft landing” looked bright, aided by the Fed’s decision in the second half of the year to lower interest rates by a percentage point.

Now, Fed officials are confronting a much thornier set of issues that have upended expectations about when the central bank might be able to lower interest rates again after it paused cuts in January. Two distinct camps have emerged — some see the Fed holding off on rate cuts for the whole year, while others see them moving more aggressively, and potentially earlier, than initially expected.

Fed officials have long maintained that they can be patient about monetary policy decisions because the economy is in a good place. March’s unexpectedly strong jobs report, which showed employers adding 228,000 new positions, reinforced the Fed’s approach but did little to allay concerns about the economic damage potentially coming down the pipeline.

On Friday, Mr. Powell said it was “too soon to say what will be the appropriate path for monetary policy,” but reiterated that the central bank was “well positioned to deal with the risks and uncertainties we face as we gain a better understanding of the policy changes and their likely effects on the economy.”

“We’ve taken a step back and we’re watching to see what the policies turn out to be and the ways in which they will affect the economy, and then we’ll be able to act,” Mr. Powell said during the discussion.

That approach echoes comments from the Fed’s vice chair, Philip Jefferson, and a governor, Lisa Cook, on Thursday.

“In my view, there is no need to be in a hurry to make further policy rate adjustments,” Mr. Jefferson said in a speech.

Ms. Cook said the Fed can “afford to be patient but attentive” even as she added that she placed “more weight on scenarios where risks are skewed to the upside for inflation and to the downside for growth.”

That combination “could pose challenges for monetary policy,” she said.

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The central bankers wrap up their last two-day meeting of the year Wednesday, when they are widely expected to announce another quarter-point rate cut — the third this year.

But particular attention will paid to the Fed’s summary of economic projections (SEP) and comments from Chair Jerome Powell, which may indicate how aggressive the central bank will be in cutting rates in 2025.

Fed Chair Jerome Powell is widely expected to announce a further quarter percentage point cut to the key borrowing rate. AP

The Fed may slow its easing in an economy that appears to have solid momentum and sticky inflation, and as the incoming Trump administration is expected to impose policies to stimulate growth and potentially reignite rising prices.

“This is just kind of standard fare for a pre-Fed day market where you have just a little bit of uncertainty, people are not sure how to position ahead of the SEP and ahead of Powell,” said Jason Ware, chief investment officer at Albion Financial Group in Salt Lake City, Utah.

“Everyone knows we’re getting 25 bps … what Powell is going to say at the press conference, what the SEP is going to tell us, those things people are not quite sure of so you have a little bit of jitters ahead of that.”

On Tuesday, the blue-chip Dow fell 267.58 points, to 43,449.90 extending the longest losing streak since 1978. The S&P 500 lost 0.39% and closed at 6,050.61, while the Nasdaq Composite, which hit a record high on Monday, dipped.32% to end at 20,109.06.

Some of the drop in the Dow can be attributed to profit-taking immediately after the 30-stock index hit a record high of 45,000.

The CNBC survey of 27 top economic experts found that 93% forecast a quarter-point rate cut in December from its current range of 4.50% to 4.75%.

The Dow posted its worst losing streak since 1978 on Tuesday with nine consecutive days in the red. Aristide Economopoulos

But only 63% of those polled said that was the right thing to do, despite experts pointing to an initial Trump bump that has revived economic activity on Main Street and Wall Street.

Inflation stands at 2.7%, well above the Fed’s 2% target.

The policymakers are expected to continue chipping away at the interest rate over the next two years. They are forecast to slash the rate down to 3.8% by this time next year and 3.4%, or just above the average neutral rate, by the end of 2026, according to the CNBC poll.

But the survey of economists, strategists and fund managers indicated there was still uneasiness about Trump’s threat of slapping tariffs on foreign goods and tax cuts.

“I can’t remember being this uncertain about the inflation outlook,” said economist Robert Fry, warning of “a mix of inflationary (tariffs, individual tax cuts) and disinflationary (deregulation, spending cuts) policies.”

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“Who knows what combination we’re going to end up with?” he added.

According to the CNBC poll, 56% of experts surveyed said the incoming administration’s economic platform is “somewhat inflationary” while a further 11% saw it as “extremely inflationary.”

“The economy remains surprisingly strong and the only risks on the horizon stem from potential tariffs and the possible deportation of essential, largely non-replaceable immigrant workers,” added economist Joel Naroff in a reference to the president-elect’s campaign promise to boot out all migrants who had illegally entered the country via the southern border.

A rate cut at Jackson Hole Wednesday would lower borrowing costs for American homes and businesses, and potentially encourage investors to sink more money into the equity market.

The respondents in the CNBC survey also pointed to the size of Uncle Sam’s budget deficit, $1.9 trillion for the 2024 fiscal year, as a possible red flag that could push prices higher.

A budget deficit occurs when a government spends more money than it receives in revenue over a specific time.

It can spark inflation, especially if money has been printed by a central bank to try and plug that fiscal black hole.

An Oct. 28 estimate from the Committee for a Responsible Federal Budget, a budget-focused think-tank, found Trump’s proposed policies could push up US fiscal debt by $7.75 trillion over the next decade from its current debt pile of $36 trillion.

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