Consumer Spending Slowdown Impacts Restaurant Stocks

Fear grips Wall Street as consumer financial strain rises, leading to spending slowdowns that could affect restaurant stocks like Chipotle, Wingstop, and Cava Group. Companies expect a tough year in 2025 but maintain growth potential.

Date: 16-03-2025

AI Rating: 5

Overview of Market Sentiment: The report highlights a significant downturn in consumer confidence, indicated by financial strain that is anticipated to trigger a spending slowdown. This will likely impact restaurant companies, including Chipotle Mexican Grill (NYSE: CMG), Wingstop (NASDAQ: WING), and Cava Group (NYSE: CAVA).

Same-Store Sales and Growth Expectations: All three brands noted a decline in same-store sales expectations for 2025. Specifically, Chipotle's same-store sales growth fell from 7.4% in 2024 to a projected low- to mid-single-digit range in 2025. Wingstop and Cava shared similar outlooks with projected same-store sales of low to mid-singledigits after strong growth in 2024.

However, it is important to note that same-store sales stability may not hinder overall revenue growth. Chipotle, which opened 304 new locations last year, still saw significant sales growth, indicating that expansion plays a crucial role in their business model.

New Store Openings: The report emphasizes the impact of expanding restaurant locations. While same-store sales are critical, growth in the number of outlets is a larger driver of revenue. For instance, despite expecting weaker same-store sales, Chipotle, Wingstop, and Cava aim to increase their number of locations in 2025, which can positively influence their top lines.

While the short-term projections may be cautious due to potential financial constraints on consumers, the long-term strategies indicate growth opportunities hence, it may be wise for investors to evaluate the overall business fundamentals rather than react quickly to the immediate economic outlook.

Stocks: CMG WING CAVA