Motley Fool Money Why Restaurant Stocks Have Gone Bad
Aug 13, 2025
Lou Whiteman and Rachel Warren, investment analysts at The Motley Fool, dive into the alarming decline of restaurant stocks like Cava and Chipotle. They explore the reasons behind the drop in customer traffic, including soaring commodity prices and shifting consumer preferences. While Chipotle faces significant challenges, Cava aims for growth despite fierce competition. The duo also highlights a thriving restaurant tech stock that offers potential for investors, shedding light on the broader implications for the restaurant industry.
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Cava's Numbers Hide Real Trouble
- Cava's headline metrics looked okay but its traffic flattened and margins compressed, prompting a sharp stock drop.
- Management cut comp-sales guidance, signaling growth and margin risk despite strong past performance.
Cava's Growth Story Isn't Dead
- Rachel notes Cava still grew revenue and restaurant-level profits strongly despite a Q2 deceleration in same-store sales.
- The company retains robust unit economics and a big addressable market that supports a long-term growth case.
Chipotle's Growth Stumbles Amid Leadership Change
- Chipotle showed its first sizable same-store sales decline in years, which shook investor confidence.
- Leadership change (Brian Niccol leaving) raises uncertainty even if operational issues likely drive the sales drop.