Dining Dollars Shift to Value and at-Home Options

It was supposed to be Mediterranean’s moment as Cava Group entered 2025 with growing momentum.

After breaking the $1 billion revenue mark, the fast-casual chain, often likened to “the Chipotle of Mediterranean food,” took a tumble this quarter.

According to second-quarter 2025 earnings results released Tuesday (Aug. 12), Cava’s same-store restaurant sales rose just 2.1%, short of the 6% consensus estimate, prompting the company to cut its full-year same-store sales growth outlook from 6% to 8% to 4% to 6%. Shares plunged 22% Tuesday.

Operating in a Fog

The consumer landscape is a bit murky. Diners are operating in “fog,” caused by a “fluid economic environment,” Chief Financial Officer Tricia Tolivar said during a Tuesday earnings call.

Part of the softness stemmed from tough year-ago comparisons. Cava had lapped the successful 2024 steak launch, with traffic remaining neutral and price and mix doing the heavy lifting. New food offerings may help Cava regain its footing, but the broader takeaway is that consumers are reining in restaurant visits, even at healthy fast-casual chains.

As food spending becomes more budget-conscious, consumers are not swinging to extremes. Instead, they’re selectively trading down. They’re dining less, but when they do, they want healthy fare. They’re grocery shopping more, but preferring store brands; and they’re buying food online, but favoring fresh, natural options.

Thus far, Q2 earnings reports paint a nuanced food economy. A cautious consumer is eating in more and often choosing healthy, low-cost versions of their desired meals.

The Consumer Price Index released by the Bureau of Labor Statistics Tuesday showed that prices are rising at restaurants and other dining establishments. Food consumed away from home rose 0.3% in July, with full-service meals up 0.5% and limited-service meals up 0.1%. Grocery prices edged down 0.1% in July.

Beyond Cava, Restaurant Brands International, which owns Burger King, Tim Hortons, Popeyes and Firehouse Subs, said in its second-quarter 2025 earnings results released Aug. 7 that Burger King U.S. same-store sales grew just 1.5%, aided by $5 value meal promotions.

Meanwhile, Wendy’s said Friday (Aug. 8) in its second-quarter earnings results that same-store sales declined 2.9% globally. CFO and interim CEO Kenneth Cook pointed to a slew of promotions that “looked great on paper as it had something for everyone. However, the volume of initiatives made it challenging for our restaurant teams to execute effectively and sent too many different messages to our customers.”

Rising cost pressure and consumer fatigue are grinding down profitable growth at legacy chains, as dollars seem to be moving toward grocers’ tills.

The Shift to the Grocery Aisles

The shift has been signaled by the likes of Kroger, which said in a first-quarter 2025 earnings presentation June 20 that identical sales rose 3.2%, ahead of expectations, driven by persistent shopper migration toward cheaper store brands and grocery value deals.

Interim CEO Ron Sargent said consumers across income levels are “navigating a significant uncertainty,” and Kroger’s private-label growth outpaced national brands for the seventh straight quarter. Its eCommerce sales climbed 15%, and deals like a $24.99 “colossal” meal kit are garnering a share of household budgets.

Separately, Albertsons said July 15 in its first-quarter 2025 earnings results that it saw a 2.8% same-store sales increase, and digital sales were up 25%. Loyalty membership rosters added 14%.

As PYMNTS has noted in its weekly updates on the jousting between Walmart and Amazon, where digital options are finding wide embrace, Amazon has begun adding perishable groceries to its same-day delivery service in the United States. The company now offers this service in more than 1,000 cities and towns and plans to expand it to more than 2,300 by the end of the year.

Food industry executives will find that the next growth cycle won’t be about flashy menu launches or faster store openings but about smart value and digital convenience.