Why CAVA (CAVA) Shares Are Getting Obliterated Today

Looking back on modern fast food stocks’ Q3 earnings, we examine this quarter’s best and worst performers, including Portillo's and its peers.

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 6 modern fast food stocks we track reported a slower Q3. As a group, revenues missed analysts’ consensus estimates by 1.4%.

Thankfully, share prices of the companies have been resilient as they are up 9.1% on average since the latest earnings results.

Portillo's

Begun as a Chicago hot dog stand in 1963, Portillo’s is a casual restaurant chain that serves Chicago-style hot dogs and beef sandwiches as well as fries and shakes.

Portillo's reported revenues of $181.4 million, up 1.8% year on year. This print fell short of analysts’ expectations by 0.7%, but it was still a strong quarter for the company with a beat of analysts’ EPS estimates and an impressive beat of analysts’ same-store sales estimates.

“Portillo’s took a number of steps to reset our growth model in the third quarter, as we proceed at a more measured pace in new markets while pursuing better unit economics,” said Mike Miles, Chairman of the Board and Interim President and Chief Executive Officer of Portillo’s.

The stock is down 13.2% since reporting and currently trades at $4.55.

Best Q3: Shake Shack

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

Shake Shack reported revenues of $367.4 million, up 15.9% year on year, outperforming analysts’ expectations by 1%. The business had a very strong quarter with an impressive beat of analysts’ same-store sales estimates and a solid beat of analysts’ EBITDA estimates.

Shake Shack pulled off the biggest analyst estimates beat among its peers. However, the results were likely priced into the stock as it’s traded sideways since reporting. Shares currently sit at $90.63.

Weakest Q3: Sweetgreen

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

Sweetgreen reported revenues of $172.4 million, flat year on year, falling short of analysts’ expectations by 3.1%. It was a disappointing quarter as it posted full-year revenue guidance missing analysts’ expectations significantly and full-year EBITDA guidance missing analysts’ expectations significantly.

Sweetgreen delivered the slowest revenue growth in the group. Interestingly, the stock is up 16.9% since the results and currently trades at $7.31.

Read our full analysis of Sweetgreen’s results here.

CAVA

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

CAVA reported revenues of $292.2 million, up 19.9% year on year. This print was in line with analysts’ expectations. Aside from that, it was a slower quarter as it logged full-year EBITDA guidance missing analysts’ expectations and a slight miss of analysts’ same-store sales estimates.

CAVA pulled off the fastest revenue growth among its peers. The stock is up 31.1% since reporting and currently trades at $67.78.

Read our full, actionable report on CAVA here, it’s free for active Edge members.

Wingstop

The passion project of two chicken wing aficionados in Texas, Wingstop is a popular fast-food chain known for its flavorful and crispy chicken wings offered in a variety of sauces and seasonings.

Wingstop reported revenues of $175.7 million, up 8.1% year on year. This number came in 5% below analysts' expectations. Overall, it was a softer quarter as it also recorded a significant miss of analysts’ same-store sales estimates and a significant miss of analysts’ revenue estimates.

Wingstop had the weakest performance against analyst estimates among its peers. The stock is up 21.5% since reporting and currently trades at $260.17.

Read our full, actionable report on Wingstop here, it’s free for active Edge members.

What Happened?

A number of stocks jumped in the afternoon session after analysts at Bernstein highlighted a potential recovery for the sector in 2026. 

After a challenging 2025 marked by weakened consumer confidence, the firm anticipates a gradual traffic recovery. Several factors could stimulate consumer demand, including an upcoming Tax Bill and the U.S.-hosted Soccer World Cup, with effects potentially starting in the spring. This optimistic outlook was supported by restaurant valuations hitting 10-year lows, suggesting significant upside if consumer spending data improves. Following a period where households cut back on dining out due to inflation, larger tax rebate checks are also seen as a potential catalyst for a rebound in casual dining.

The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks.

Among others, the following stocks were impacted:

• Sit-Down Dining company Darden jumped 3.8%. Is now the time to buy Darden? Access our full analysis report here, it’s free for active Edge members.
• Modern Fast Food company CAVA jumped 6.7%. Is now the time to buy CAVA? Access our full analysis report here, it’s free for active Edge members.
• Modern Fast Food company Shake Shack jumped 9.1%. Is now the time to buy Shake Shack? Access our full analysis report here, it’s free for active Edge members.
• Traditional Fast Food company Krispy Kreme jumped 5.3%. Is now the time to buy Krispy Kreme? Access our full analysis report here, it’s free for active Edge members.
• Sit-Down Dining company Cracker Barrel jumped 8.5%. Is now the time to buy Cracker Barrel? Access our full analysis report here, it’s free for active Edge members.

Zooming In On Shake Shack (SHAK)

Shake Shack’s shares are very volatile and have had 26 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.

The previous big move we wrote about was 21 days ago when the stock dropped 1.8% on the news that a weak November jobs report raised concerns about consumer spending, which could impact restaurant sales. 

The report revealed that the U.S. unemployment rate rose to a three-year high of 4.6%, its highest level since 2021. This data created caution among traders, who worried that a weaker job market might lead consumers to cut back on discretionary purchases, such as dining out. Reflecting these broader concerns, the Russell 2000 index, which tracks smaller companies, also declined. The restaurant sector as a whole had already faced pressures from higher costs and subdued customer traffic. Adding to the day's news, analysts at Jefferies maintained a "Hold" rating on the company's shares.

Shake Shack is up 7.4% since the beginning of the year, but at $89.68 per share, it is still trading 36.9% below its 52-week high of $142.03 from July 2025. Investors who bought $1,000 worth of Shake Shack’s shares 5 years ago would now be looking at an investment worth $1,032.

What Happened?

Shares of mediterranean fast-casual restaurant chain CAVA jumped 5.5% in the morning session after the company kicked off 2026 with its largest-ever menu launch, which included the return of a fan-favorite item. 

The Mediterranean fast-casual chain announced a new menu featuring several new items and the reintroduction of white sweet potatoes, an item for which customers had been making frequent requests. The launch was the biggest in CAVA's history and featured new high-protein bowls like the Spicy Lamb + Sweet Potato Bowl and the Harissa Chicken Power Bowl. Other new items introduced were Sumac Sour Cream + Onion Pita Chips and Tangerine Aleppo dressing. Ted Xenohristos, CAVA's Co-founder and Chief Concept Officer, stated that the new offerings were intended to “bring the bold, bright flavors of the Mediterranean straight to our guests.”.

What Is The Market Telling Us

CAVA’s shares are extremely volatile and have had 31 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.

The previous big move we wrote about was 18 days ago when the stock gained 7% on the news that the company received a strong 'Buy' consensus rating from Wall Street analysts. According to a report, 20 analysts collectively held a "Buy" rating on the stock. This broad positive view from financial experts likely boosted investor confidence.

CAVA is up 8% since the beginning of the year, but at $65.37 per share, it is still trading 54.3% below its 52-week high of $142.90 from February 2025. Investors who bought $1,000 worth of CAVA’s shares at the IPO in June 2023 would now be looking at an investment worth $1,493.