MW Consumers are losing patience with $17 salads. Have we reached peak 'slop bowl'?

By Bill Peters

Analysts debate a tough stretch for fast-casual chains after results from Cava and Sweetgreen lead to record daily stock drops and as sit-down chains make a comeback

Fast-casual chains have warned of uneven consumer trends, while investors have recently been kinder to casual-dining restaurants.

A decade ago, fast-casual restaurants were touting "real ingredients." Today, they're mucking through the era of the "slop bowl."

And as shares of Chipotle Mexican Grill Inc., Sweetgreen Inc. and Cava Group Inc. stumble after a stronger 2024, some analysts are taking a harder look at the industry amid tempered forecasts, still-anxious consumers wrestling with price-hike fatigue and signs of life - and value deals - in the sit-down restaurants popular in previous decades.

After a more cautious sales-growth outlook sent Mediterranean chain Cava $(CAVA)$ on its biggest drop ever on Wednesday, Dan Ahrens, portfolio manager of the AdvisorShares Restaurant exchange-traded fund EATZ, said the fast-casual industry needed to find a new direction - or at least to "update itself a little bit."

"There's no doubting the great success that Chipotle had for a very long period of time, and a lot of people want to emulate that model," he said in an interview.

Amid the current slump, those chains - which try to combine the service speed of fast food with higher-quality ingredients likelier to be found at full-service restaurants - have an opportunity to focus more on catering and corporate and group meetings, Ahrens said.

But for now, William Blair analyst Sharon Zackfia said in a research note on Wednesday, it was a "tough quarter in fast-casual," as consumers cut back on pricier selections.

Prices vary, with a bowl at a fast-casual chain in Los Angeles running from around $9 to around $18 before taxes. Last week, Sweetgreen's $(SG)$ shares also notched their worst drop ever as customers cut back on high-priced salads. Same-store sales fell 7.6% in the chain's most recently reported quarter, and its chief executive said it was "not satisfied" with its results.

Elsewhere, Cava CEO Brett Schulman likened consumers' current unease over the economy to a "fog" that lifts and descends amid the Trump administration's unpredictable trade war. Last month, Chipotle $(CMG)$ CEO Scott Boatwright said that after a slowdown in May, the Mexican fast-casual chain saw "momentum build" as it carried out summer marketing plans and worked to improve service.

"However, considering the ongoing volatility in our trends in the consumer environment, we now anticipate comparable sales to be about flat for the full year," he said.

Ahrens noted that the AdvisorShares restaurant fund launched during the pandemic, when indoor restrictions and a massive shift to online ordering reshaped dining rooms. The fund, he said, started out with names related to pizza and wings as its biggest holdings - things that made for easy takeout ordering. Later, he said, the best place to invest seemed to shift more toward fast-casual restaurants, after price hikes in response to higher costs came back to haunt their fast-food peers.

Then, Ahrens said, fast-casual cooled down. Over the past year, he said, the fund has rotated into full-service "casual dining" chains like Cheesecake Factory Inc. $(CAKE)$, Texas Roadhouse Inc. $(TXRH)$, Chili's parent Brinker International Inc. $(EAT)$ and Olive Garden parent Darden Restaurants Inc. $(DRI)$.

Texas Roadhouse's stock is down around 4% so far this year. But over that period, shares of Cheesecake Factory have risen more than 30%, Brinker's stock is up around 18% and Darden's stock is up around 9%.

While those restaurants have struggled in years past, analysts say prices at casual dining chains have stayed somewhat competitive. Some chains - like Chili's, which offers a deal with a drink, appetizer and entree that starts at $10.99 - also haven't shied away from the fast-food discount fray. Moreover, those restaurants might offer a bit more atmosphere - something Cava and Starbucks Corp. $(SBUX)$ are also investing in.

For Brinker, some of the excitement appeared difficult to contain. Chief Executive Kevin Hochman said during the company's earnings call on Wednesday that a multiyear turnaround effort, a simpler menu, more staffing and better equipment and restaurant conditions, as well as the relaunch of its ribs, set Chili's up "to continue growing market share in the industry for years to come."

Sales at Chili's were up 24% during the quarter. Customers, he said, were "raving about the look, the size and the taste of the ribs." In the company's earnings release, Hochman said Chili's was "officially back, baby back."

Brinker has played into nostalgia elsewhere. During its earnings call in April, Brinker said said it had opened a "Chili's Scranton Branch" in the Scranton area of Pennsylvania - a throwback to the workplace comedy "The Office" complete with "2005 decor" and a photo booth. Hochman, in April, said the location was a way to "reignite Chili's brand history."

"As value continues to dominate consumer behavior in 2025, full-service restaurants (FSRs) are finding creative ways to adapt to rising costs and shifting consumer priorities," Lila Margalit, writing for foot-traffic analytics firm Placer.ai, said last month.

Margalit added: "Despite ongoing anxiety about the economy, FSR visitation trends show that consumers continue to seek out opportunities to enjoy sit-down meals outside the home."

The trend isn't universal. Denny's Corp. $(DENN)$ has been feeling the pinch from the promo deluge. Still, last week, it pointed to signs of firming demand and said its own "Buy One Get One Slam for $1" deal had brought some consumers back.

Other analysts have also found bright spots in fast-casual. After Chipotle's earnings, Stephens analyst Jim Salera said efforts like catering, more limited-time menu offerings and plans to tighten up kitchen operations represented longer-term opportunities. However, he said those moves could take time to pan out.

As for Sweetgreen, Piper Sandler analysts said they were still "big believers in the brand." And Tracey Ryniec, a stock strategist at Zacks, said Cava's same-store sales growth forecast was still above the rest of the industry.

When asked what he made of the term "slop bowl" and what it said about the fast-casual industry and the dining culture writ large, Schulman, Cava's chief executive, said he viewed the term as a "pejorative" and that it was the company's job to set itself apart to rise above the label.

"That gets talked about in terms of the 'sad desk lunch,' or the 'office-worker lunch,'" he said. "Eighty-seven percent of our restaurants are in the suburbs. Almost 50% of our business is at dinner."

He said the company made its own dips and spreads in its production facilities that were sold in places like Whole Foods. And he defended the chain as, ultimately, a "culinary brand."

"We cook with fire, we roast, we grill, we braise," he said. "We are a dinner night out for families and couples in the suburbs. We are lunch for a family after a sports practice on the weekend, and we're lunch for an urban professional. But we're not just an office-worker lunch place."

-Bill Peters

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August 14, 2025 12:23 ET (16:23 GMT)

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