Younger Americans are eating out less. Restaurant chains are feeling the pressure

Cava is the latest fast food brand to warn that younger consumers are losing their appetite.

The fast-casual, Mediterranean-style restaurant chain late Tuesday reported slower same-restaurant sales and revenue growth in the third quarter compared to recent periods. CAVA is not immune to the economic pressures affecting 18- to 34-year-olds, said Chief Financial Officer Tricia Tolivar, although she said it is attracting a larger share of those who are still dining out.

“Within their basket at Cava, we don’t see big changes,” Tolivar said. InvestopediaNoting that consumers are requesting typical levels of proteins, drinks and premium pita chips. She added that there is a “more general sense of thinking about the frequency” of eating out.

Chipotle Mexican Grill (CMG) also highlighted caution among younger Americans, specifically citing people ages 25 to 34 who make less than $100,000 a year. Both Cava and Chipotle want to be known for offering value, with fresh ingredients and generous portions. But the informal sector’s reputation in this regard has taken a hit as young Americans face rising student loan bills, slowing wage growth and an unfavorable labor market, Chipotle CEO Scott Boatwright said on a conference call last week.

“The informal sector is completely unviable and considered unsustainable,” Boatwright said, according to a transcript made available by AlphaSense. Chipotle needs to better showcase its value proposition and “differentiate what makes Chipotle unique and special,” he said.

Cava reported 1.9% year-over-year same-restaurant sales growth in the third quarter, along with a 20% increase in revenue to nearly $290 million. Both numbers were below analyst expectations, according to Visible Alpha consensus estimates. Diluted EPS of $0.12 was also lower than the $0.13 expected. The company lowered its forecasts for the full fiscal year.

The restaurant says its popular steak offerings in 2024 have deviated from year-over-year comparisons. However, Cava’s same-restaurant sales growth is the lowest year-over-year rate Cava has reported over the past 10 quarters, according to data from Visible Alpha.

Tolivar said there were some bright spots for Cava. She said people were unlikely to cut down on their food intake by recreating kava meals at home, because many items such as shawarma, meat cooked on a spit, can be difficult to make.

Cava is also seeing “strength in lower-income groups,” where people may appreciate that Cava has raised prices less than others in recent years, Tolivar said.

“We are now more accessible to low-income consumers than we were in the past,” she said.

Cava shares ended Tuesday down less than 2% ahead of results, putting them at a roughly 54% discount for 2025. Read Investopedia Complete coverage of the daily markets here.