Fast-casual and dine-in restaurants struggled in 2024 as inflationary pressure caused consumers to tighten spending habits in 2024. However, fast casual restaurants in a “build your own bowl” (BYB) format in the retail/wholesale sector had a stellar year. These types of restaurants had an almost resilient aura around them, as their high prices did not deter consumers from spending. Adding steak and beef to their menus has also boosted revenue. Heading into 2025, investors are curious to see if the spending trend will continue at BYB’s top three fast-casual restaurants. Here’s how they fared in their recent results and what bodes for their future results. Is there a clear winner that stands out above the rest? Yes.
CAVA: Mediterranean restaurant Chipotle continues to break records
Cava group today
As of 12:28 PM ET
- 52 week range
- $40.05
▼
$172.43
- P/E ratio
- 257.83
- Price target
- $143.80
With shares rising 189% in 2024 Kafa Group Company New York Stock Exchange: CAFA It created a sensation with investors and consumers. The restaurant offers a healthy option to its dishes with proteins ranging from grilled chicken, lamb meatballs, falafel and steak, as well as 38 fresh Mediterranean toppings such as pickled cabbage slaw, grilled eggplant, feta cheese, hummus and sauces such as tzatziki, spicy mayo and harissa. And lemongrass tahini. There are 17 billion possible combinations. Customers can also order their meals in pita sandwiches. The company has grown to more than 350 locations, with plans to open 56 to 58 new locations in 2024.
Shooting all pistons to take the crown with comp growth of 18.1% year over year
CAVA reported third-quarter 2024 EPS of 15 cents, beating analyst estimates by 4 cents. Revenue rose 39% year-over-year to $243.82 million, beating consensus estimates of $233.05 million. Same restaurant sales rose 18.1% year over year With the number of guest visits increasing by 12.9% year-on-year. While the approximately 5.2% increase came from menu prices and product mix, the increase in guest traffic is a strong sign of organic growth. The profit margin at the restaurant level increased to 25.6%. Average unit volume (AUV) increased to $2.8 million. The company seeks to enter the South Florida and Midwest markets in 2025. Mediterranean may be the next major cultural cuisine category.
CAVA issues implied revenue for 2024 but raises comp and margin guidance
Incidentally, CAVA appears to have taken a conservative approach to forecasts, with full-year revenue expected to be between $675 million and $680 million versus the consensus estimate of $678.56 million. CAVA raised its store sales guidance to between 12% and 13%, from 8.5% to 9.5%. CAVA raised its restaurant profit margin forecast to 24.5% to 25%, from 24.2% to 24.7%.
CAVA Group, Inc. (CAVA) price chart for Monday, January 6, 2025
Get over FOMO
Although the results were amazing, it is important not to rush into buying the stock first. FOMO investors found that out the hard way after earnings. Shares rose to $172.43 the next morning from $145.03, only to “sell the news” after the price gap fell to a low of $133.00 several days later.
Was the 200% profit taking justified? Insiders thought so, with top executives unloading shares soon after. The stock is still trading around the $115.08 level with a P/E of $250 but near the pre-earnings support level of $110.00, which is much cheaper than the peak of $172.43 someone bought it the day after earnings.
Chipotle: Incumbent grinds along while companies slow down
Chipotle Mexican Grill Today
Chipotle Mexican Grill
As of 12:28 PM ET
- 52 week range
- $44.08
▼
$69.26
- P/E ratio
- 54.90
- Price target
- $66.55
Incumbent and pioneer of the BYB-style fast casual restaurant model Chipotle Mexican Grill Company New York Stock Exchange: CMG It made headlines when its popular CEO, Brian Nicol, was kidnapped Starbucks Corporation New York Stock Exchange: SBUX For more than $100 million in total compensation.
The company posted double-digit performance in the previous quarter with its limited-time Chicken Pastor game. However, that momentum slowed as the company reported third-quarter 2024 revenue growth of 13% year over year to $2.79 billion, below consensus estimates of $2.82 billion. Restaurant sales growth also fell by nearly half to just 6%. Smoked brisket had another quarter of strong results, the company says.
Chipotle Mexican Grill, Inc. pricing chart (CMG) for Monday, January 6, 2025
Chipotle reaffirms guidance and gains more Chipotlanes
Chipotle reaffirmed full 2024 comp guidance for mid-to-high single digits. It reaffirmed expectations for the opening of company-operated restaurants for the full year of 2024 from 285 to 315 units. For 2025, Chipotle expects to open between 315 and 345 new company-operated restaurants, with more than 80% of them coming through Chipotlanes.
Sweetgreen: Sweet growth but sour profits
Sweet green today
Sweet green
As of 12:28 PM ET
- 52 week range
- $9.66
▼
$45.12
- Price target
- $39.80
Health-conscious newcomer BYB Sweet Green Company New York Stock Exchange: Saint-Germain 2024 has been stellar, with shares up 220%. The addition of caramelized garlic steak was a game-changer because it expanded its audience beyond vegetarians. The caramelized garlic steak quickly grew in popularity as it was chosen in one out of every five dinner orders. Coming out of Q2 2024, momentum has slowed.
Sweet Green reported a third-quarter 2024 EPS loss of 18 cents, beating estimates by 5 cents. Revenue rose 13% year-over-year to $173.43 million, beating consensus estimates of $175.46 million. Same-store sales rose 6% year-over-year, compared to 4% a year earlier. Restaurant-level profit was $34.9 million, and restaurant-level profit margin was 20.2%, which represented an improvement from the prior quarter of $29.1 million and 19%, respectively.
Sweetgreen issues in routing line
The company expects full-year 2024 revenues to range from $675 million to $680 million, compared to $678.56 million. Same-store sales growth is expected to range between 6% and 7%. The profit margin at the restaurant level is expected to range between 19.5% and 20%.
Sweetgreen, Inc. Pricing Chart (SG) for Monday, January 6, 2025
Jonathan Newman, co-CEO of Sweetgreen, commented: “Our expanded menu, combined with the performance of our 2024 class of new restaurant openings, growth in emerging markets and our successful deployment of Infinite Kitchen, gives us confidence in re-accelerating our unit growth for 2025.” .
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