Let’s dig into the relative performance of CAVA (NYSE:CAVA) and its peers as we unravel the now-completed Q1 modern fast food earnings season.

Modern fast food is a relatively newer category representing a middle ground between traditional fast food and sit-down restaurants. These establishments feature an expanded menu selection priced above traditional fast food options, often incorporating fresher and cleaner ingredients to serve customers prioritizing quality. These eateries are capitalizing on the perception that your drive-through burger and fries joint is detrimental to your health because of inferior ingredients.

The 7 modern fast food stocks we track reported a mixed Q1. As a group, revenues were in line with analysts’ consensus estimates.

Thankfully, share prices of the companies have been resilient as they are up 5.3% on average since the latest earnings results.

CAVA (NYSE:CAVA)

Starting from a single Washington, D.C. location, CAVA (NYSE:CAVA) operates a fast-casual restaurant chain offering customizable Mediterranean-inspired dishes.

CAVA reported revenues of $331.8 million, up 28.1% year on year. This print exceeded analysts’ expectations by 1.2%. Overall, it was a strong quarter for the company with an impressive beat of analysts’ EPS estimates and a decent beat of analysts’ EBITDA estimates.

"In spite of economic uncertainty and challenging weather, CAVA’s first quarter results demonstrate the continued strength of our category-defining brand,” said Brett Schulman, Co-Founder and CEO.CAVA Total Revenue

CAVA pulled off the fastest revenue growth of the whole group. Investor expectations, however, were likely higher than Wall Street’s published projections, leaving some wishing for even better results (analysts’ consensus estimates are those published by big banks and advisory firms, not the investors who make buy and sell decisions). The stock is down 14.8% since reporting and currently trades at $84.55.

Is now the time to buy CAVA? Access our full analysis of the earnings results here, it’s free.

Best Q1: Potbelly (NASDAQ:PBPB)

With a unique origin story where the company actually started as an antique shop, Potbelly (NASDAQ:PBPB) today is a chain known for its toasty sandwiches.

Potbelly reported revenues of $113.7 million, up 2.3% year on year, outperforming analysts’ expectations by 1.7%. The business had an exceptional quarter with an impressive beat of analysts’ EPS estimates and a solid beat of analysts’ EBITDA estimates.Potbelly Total Revenue

Potbelly pulled off the biggest analyst estimates beat among its peers. The market seems happy with the results as the stock is up 21.2% since reporting. It currently trades at $10.35.

Story Continues

Is now the time to buy Potbelly? Access our full analysis of the earnings results here, it’s free.

Slowest Q1: Shake Shack (NYSE:SHAK)

Started as a hot dog cart in New York City's Madison Square Park, Shake Shack (NYSE:SHAK) is a fast-food restaurant known for its burgers and milkshakes.

Shake Shack reported revenues of $320.9 million, up 10.5% year on year, falling short of analysts’ expectations by 2%. It was a softer quarter as it posted a miss of analysts’ same-store sales and EBITDA estimates.

Interestingly, the stock is up 33.6% since the results and currently trades at $117.28.

Read our full analysis of Shake Shack’s results here.

Chipotle (NYSE:CMG)

Born from a desire to offer quick meals with fresh, flavorful ingredients, Chipotle (NYSE:CMG) is a fast-food chain known for its healthy, Mexican-inspired cuisine and customizable dishes.

Chipotle reported revenues of $2.88 billion, up 6.4% year on year. This print missed analysts’ expectations by 2.1%. It was a slower quarter as it also logged a miss of analysts’ same-store sales estimates.

Chipotle had the weakest performance against analyst estimates among its peers. The stock is up 4.2% since reporting and currently trades at $50.75.

Read our full, actionable report on Chipotle here, it’s free.

Sweetgreen (NYSE:SG)

Founded in 2007 by three Georgetown University alum, Sweetgreen (NYSE:SG) is a casual quick service chain known for its healthy salads and bowls.

Sweetgreen reported revenues of $166.3 million, up 5.4% year on year. This result surpassed analysts’ expectations by 0.9%. Taking a step back, it was a mixed quarter as it also recorded a solid beat of analysts’ EBITDA estimates.

Sweetgreen had the weakest full-year guidance update among its peers. The stock is down 26.5% since reporting and currently trades at $13.36.

Read our full, actionable report on Sweetgreen here, it’s free.

Market Update

As a result of the Fed’s rate hikes in 2022 and 2023, inflation has come down from frothy levels post-pandemic. The general rise in the price of goods and services is trending towards the Fed’s 2% goal as of late, which is good news. The higher rates that fought inflation also didn't slow economic activity enough to catalyze a recession. So far, soft landing. This, combined with recent rate cuts (half a percent in September 2024 and a quarter percent in November 2024) have led to strong stock market performance in 2024. The icing on the cake for 2024 returns was Donald Trump’s victory in the U.S. Presidential Election in early November, sending major indices to all-time highs in the week following the election. Still, debates around the health of the economy and the impact of potential tariffs and corporate tax cuts remain, leaving much uncertainty around 2025.

Want to invest in winners with rock-solid fundamentals? Check out our Top 6 Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.

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