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In midtown Manhattan, there are long lines outside even at 12:30 p.m. on a midweek office day. chipotle pepper, hippopotamusand sweet green. Fast-casual bowls remain the defining lunch of the hybrid work era: grab-and-go, easy to eat at your desk, and familiar enough to order without a second thought. But this apparent popularity sits alongside a more difficult financial reality within the chain restaurant companies that have created a boom in bowls.
Chipotle, Cava and Sweetgreen have all reported declining traffic and fewer visits, especially among younger consumers, amid a tense economic environment highlighted by food inflation and job insecurity. Nearly two-fifths of consumers say fast-casual is now too expensive, according to Datassential, a finding that echoes comments from Chipotle executives who said on a recent earnings call that the company is battling the perception that its menu is more expensive than it actually is. The battle for the bowl economy is occurring at a time when Gen Z unemployment rates are higher than the national average.
“Relative to the restaurant industry as a whole, we tend to be skewed toward this group, which is young and indexed a little bit too high,” Chipotle CEO Scott Boatright said on a recent earnings call. He pointed to tighter budgets and said the group is being more cautious with discretionary spending, which is leading to fewer weekday lunches.
Cava reported similar revenue, with CEO Brett Schulman pointing to a “younger demographic between 25 and 35 years old” during a recent earnings call.
Rising unemployment, student loan repayments, and tariffs are causing young customers to think carefully about each purchase. With fewer customers, fast-casual restaurants are implementing new strategies to attract customers, focusing on loyalty programs and high-engagement promotions. According to DataSessential, two-thirds of consumers say promotions influence their decisions and more than one-third say loyalty programs are appealing.
Chipotle shifted its focus more toward loyalty as sales began to stagnate over the summer, and is now doubling down on deals to bring customers back. All three fast-casual chains have introduced a variety of campaigns since the end of their third quarter on Sept. 30, the day of their most recent slump.
In October, Chipotle introduced a month-long rewards program tied to entree purchases and scans in the app. On Halloween, costumed attendees will receive a $6 entree starting at 3 p.m. Capitalizing on the bowl’s popularity on social media, Chipotle added a Halloween TikTok challenge this year, something it hasn’t done since 2020, another uncertain time for the restaurant industry.
Year-to-date performance of Hippo and Chipotle stocks.
These efforts will continue throughout the holiday season. Chipotle announced it will be offering buy-one-get-one-free entrees inside its restaurants from 4 p.m. until close on Wednesday, Nov. 26, noting in a release that this is a “popular time for young people to reconnect with friends.” For Cyber Weekend of the holiday shopping season, Chipotle is offering $0 shipping on orders placed through the Chipotle app and Chipotle.com. It also launched a new Chipotle University Rivals Week in the college town.
“We are driving new signups at scale, re-engaging lapsed members, and increasing frequency for existing members. Our results show that creating engaging experiences for Rewards members drives them to visit our stores more often and spend more,” Chris Brandt, president and chief brand officer at Chipotle, said in a statement to CNBC.
“It’s important to not only increase frequency, but also create some level of community engagement with the brand, which will help the brand in the long run,” said Danilo Gargiulo, senior research analyst at Bernstein.
Cava revamped its loyalty program in October, testing a new format to meet digital demands with a new tiered status system. According to Datassential, fast-casual loyalty adoption rates are currently 59%, one of the highest across the restaurant sector, increasing the importance of how these programs are designed.
Wall Street Takes Loyalty Initiative to the Limits
Wall Street is positive about the concept of loyalty, but skeptical about its ability to effect major change at this point. “This is a unique royalty structure that we haven’t seen anywhere else in the world,” Andrew Charles, senior research analyst at TD Securities, told CNBC. “The biggest thing that has changed in recent months is Gen Z, and their weight is hurting the industry and transport,” Charles said.
The extent to which the chain is trying to increase brand awareness is moving into more questionable territory, with Cava launching its own line of merchandise earlier this month that includes graphic T-shirts, hoodies, hats, socks, and a collection that includes the brand’s food dictionary Hot Harissa Hat and Extra Pickled Onions Tee.
Wall Street is not impressed. “This is not a meaningful extension. It’s more of a halo extension of the brand, because companies that work over the long term are companies that create culture, but not like this,” Gargiulo said.
Sweetgreen took a different approach to win back customers after several quarters of weak business in key markets like the Northeast and Los Angeles, which saw younger guests spend less. A Sweetgreen spokesperson said protein continues to be one of guests’ biggest priorities, with the company introducing a macronutrient tracking tool that allows guests to see a complete breakdown of protein, carbs and fat displayed alongside calories next to menu items and custom bowls. This fall, the chain launched Power Max Protein Bowls, which have 106 grams of protein and 25% more chicken and tofu.
But Sweetgreen has a long-standing inability to understand a profitable business model, a bigger problem than the current decline in consumer financial confidence among young consumers.
Among Wall Street analysts, Alton Stump of Loop Capital Markets sees selling Chipotle as an opportunity. He maintains a buy rating on the stock and wrote in a recent report that Chipotle’s third-quarter results don’t justify the steep decline in the stock’s year-to-date loss of nearly 50%. Discussion that the brand started losing core young customers in the third quarter is a “growth story,” he wrote of conversations the company has had with investors, many of whom expect the loss of customers to continue for at least the short to medium term. But Stump added that while the story “definitely has some value,” he believes it is “overblown.”
Other bowl bulls are now on hold. Although Kava shares have fallen nearly 60% since the beginning of the year, UBS senior research analyst Dennis Geiger wrote in a recent report that Kava remains an “attractive” growth story with a differentiated menu offering, potential sales drivers and attractive unit returns. But his report concluded that more evidence is needed that previous high growth rates can be restored even in difficult economic conditions. UBS has suspended its rating on the stock, awaiting a clearer outlook on its 2026 performance.
