As Cava, Chipotle Sink, Casual-Dining Rivals Stage a Comeback

As inflation and a slowing economy start taking their toll on the US consumer, the pain is mounting across the restaurant industry. Shares of Chipotle Mexican Grill Inc., Cava Group Inc. and Sweetgreen Inc. — hot names in what had been a booming fast-casual segment — have each sunk around 20% or more since reporting lackluster second-quarter earnings. Even McDonald’s Corp., among the most resilient of fast-food standbys, is barely keeping pace with the broader market.

All of which makes the robust earnings and stock rallies coming from a slightly more expensive segment of the restaurant world surprising. Casual-dining chains are posting strong sales growth that is suddenly rekindling investor interest in a business that many had condemned in recent years to a slow demise.