Chipotle, Shake Shack, and other fast-casual food stocks tank, but the sell-off may be overdone

Tariff-fueled recession fears that person rocked stocks successful March don't look to beryllium damaging higher-income consumers' tendency to bargain crockery bowls and burritos.

Sentiment connected user request remains beardown this period for 2 of the fast-casual industry's bellwether chains, Chipotle (CMG) and Sweetgreen (SG), per Bank of America expert Sara Senatore.

Senatore hosted executives from six edifice companies astatine BofA's user league this week: Chipotle, Sweetgreen, Brinker International (EAT), Restaurant Brands (QSR), Texas Roadhouse (TXRH), and Cracker Barrel (CBRL).

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"Chipotle is seeing beardown user sentiment and feedback with small divergence successful behaviour betwixt the income cohorts - noting beardown maturation successful sides and attach," Senatore said successful a lawsuit note, pursuing a gathering with Chipotle's caput of capitalist relations.

Chipotle reiterated expectations for level transaction maturation successful the archetypal quarter, an important indicator that request hasn't changed overmuch since Chipotle reported net a fewer weeks ago.

The vibes were akin for Sweetgreen, Senatore pointed retired aft chatting with the CFO.

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"Sweetgreen reiterated commentary provided astatine its 4th fourth net telephone (on February 26), highlighting that request began to prime up arsenic terrible weather, which impacted January (including LA fires) and overmuch of February, dissipated," Senatore wrote. "In newer markets similar Texas, Atlanta, Florida, and the precocious Midwest Sweetgreen is seeing consistently precise beardown comparable income trends wherever paper innovation (protein plates, steak) and palmy selling astir caller store openings person proven effective."

Worries astir the gait of user spending person hammered the banal prices of fast-casual restaurants.

Shares of Sweetgreen are down 10% successful the past month, Chipotle has shed 15%, and Cava has mislaid a whopping 41%. Shake Shack (SHAK) has plunged 24%

Only clip volition archer whether the sell-offs person been overdone.

"We did not perceive from immoderate companies suggesting there’s wide sailing up for the user (although Cava sounded still-strong re: outlook) oregon immoderate existent worldly pivot from 4th fourth net telephone commentary (e.g., expecting a choppy user backdrop successful 2025)," Citi edifice expert Jon Tower wrote earlier this week. "But banal terms movements crossed the abstraction implicit the past week did not look to acceptable to the code from the 9 edifice absorption teams successful attendance."