Why Restaurant Stocks Have Gone Bad

Motley Fool Money

The Motley Fool

Business, Investing

4.4 • 3K Ratings

🗓️ 13 August 2025

⏱️ 22 minutes

🔗️ Recording | iTunes | RSS

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Summary

Restaurants are starting to see a drop in traffic and pressure from higher commodity prices and labor costs. So, it’s no surprise restaurant stocks are down big this year, but the size of the drop in names like Cava and Chipotle are shocking. Plus, we cover the one restaurant tech stock you need to know. Travis Hoium, Lou Whiteman, and Rachel Warren discuss: - Cava’s big earnings drop - Why Chipotle has struggled - Restaurants as an economic warning - 1 restaurant tech stock that’s still growing Companies discussed: Cava (CAVA), Chipotle (CMG), Host: Travis Hoium Guests: Lou Whiteman, Rachel Warren Engineer: Dan Boyd Disclosure: Advertisements are sponsored content and provided for informational purposes only. The Motley Fool and its affiliates (collectively, “TMF”) do not endorse, recommend, or verify the accuracy or completeness of the statements made within advertisements. TMF is not involved in the offer, sale, or solicitation of any securities advertised herein and makes no representations regarding the suitability, or risks associated with any investment opportunity presented. Investors should conduct their own due diligence and consult with legal, tax, and financial advisors before making any investment decisions. TMF assumes no responsibility for any losses or damages arising from this advertisement. We’re committed to transparency: All personal opinions in advertisements from Fools are their own. The product advertised in this episode was loaned to TMF and was returned after a test period or the product advertised in this episode was purchased by TMF. Advertiser has paid for the sponsorship of this episode. Learn more about your ad choices. Visit megaphone.fm/adchoices

Transcript

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0:00.0	Why have restaurant stocks gone south in 2025?
0:05.0	Monty Fool Money starts now.
0:10.0	Restaurant stocks like Chipoli, Darden, and Starbucks have been some of the biggest winners for investors over decades.
0:27.9	But are consumer tastes changing?
0:30.2	I'm joined by Lou Whiteman and Rachel Warren to try to answer that question.
0:34.8	Let's get to the news of the day.
0:36.9	And that's Kava. There's been some
0:39.7	really strange trends in a lot of the restaurant industry over the past few months, companies
0:44.5	that were growing like crazy, suddenly reporting negative numbers. Kava reported after the market
0:50.0	closed yesterday as we're recording and the stock's down 23% early in trading.
0:55.2	Lou, what did we learn from Kava, and why is this such a huge reaction from investors?
1:00.3	So the headline numbers were fine, but if you dig a little deeper, if traffic goes flat,
1:05.4	margins are down, and they did warn of comp sales guidance. So comp sales are kind of, because these restaurant chains are growing so fast, you kind of want
1:14.3	to compare apples to apples, like how many stores did you have last year, how many stores
1:18.1	you have this year, and obviously just kind of getting more throughput through those stores.
1:23.2	This is such a scale business.
1:24.6	That's so important.
1:25.7	They lowered their comp sale guidance by 200 basis
1:28.0	points to 4% to 6% growth. That's a bad sign. Now, some of this, I think, is the big macro.
1:35.2	CFO, Trisha Tolliver said we're operating in a fluid macro-economic environment,
1:40.3	and that one that sort of creates fog for consumers with things changing constantly. If there's fog
1:45.7	for consumers, it's translated into fog for the business, which is fog for investors. And
	...

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