As we close out Q2 2024, it’s clear that the market trends we’ve been observing all year are here to stay. Much like in Q1, Fast Casual leaders continue to dominate the landscape with impressive growth.

CAVA, Sweetgreen, and Shake Shack have all shown strong performances, affirming the shift in consumer behavior toward brands that offer a mix of quality, convenience, and value. These brands have not only built strong customer loyalty but have also strategically positioned themselves in prime real estate locations—key factors driving their success.

What’s even more surprising is that these Fast Casual stocks are outperforming the “Tech Seven”—Apple, Microsoft, Alphabet, Amazon, Meta, Nvidia, and Tesla—over the last year. While the tech giants have seen their stock growth slow after their pandemic-era boom, Fast Casual leaders are capturing the attention of investors seeking growth in sectors that are benefiting from post-pandemic consumer shifts.

CAVA’s Q2 2024 report highlighted a robust 12% increase in same-store sales, driven by continued menu innovation and their expanding presence in suburban areas. With over 80 new stores opened in the first half of the year, CAVA’s focus on blending Mediterranean flavors with a modern, customizable approach has resonated deeply with consumers looking for healthier options. CEO Brett Schulman noted that their focus on digital ordering has also paid off, with digital sales accounting for over 60% of total revenue—a testament to how convenience and technology are shaping the Fast Casual space.

Sweetgreen’s Q2 2024 report echoed similar success. Their same-store sales grew by 10%, bolstered by a digital-first approach that now represents 70% of their revenue. Sweetgreen’s CEO Jonathan Neman emphasized that their expansion into new markets, including their first-ever drive-thru locations, has been well-received by customers who crave both speed and quality. Neman also highlighted their loyalty program, which has reached over 5 million members, contributing to high levels of repeat business. This digital engagement has helped Sweetgreen maintain strong growth while deepening their connection with their customer base.

It’s hard not to think about Chipotle’s potential trajectory had Brian Niccol stayed on as CEO. With his visionary leadership, Chipotle could have likely seen a similar uplift. However, even without Chipotle in the mix, the broader narrative is clear: the shift from traditional Casual Dining and QSR (Quick Service Restaurants) to Fast Casual is not just a trend—it’s becoming the new standard in dining.

Consumers are increasingly seeking a dining experience that balances speed and quality, and Fast Casual brands are excelling by offering healthier options, innovative menus, and tech-enabled conveniences, all while maintaining an affordability that resonates with today’s cost-conscious diners. This trend is shaping the industry, with Fast Casual emerging as a preferred choice for many. However, traditional Casual Dining and QSR concepts continue to play an important role, adapting their offerings to meet evolving customer preferences and exploring new ways to enhance the overall dining experience.

Week Ending | 31/07/2024

The last 30-day performance has had an average of 23.7% for the Top 10.

The top 10 is made up of mostly Franchisor entities, which have higher multiples than company owned concepts. Consensus revenue growth forecasts estimate ~10% growth into 2024. The growth guidance is attributable to store growth and price increases.

The restaurant industry has seen valuations decline due to interest rate increases.