Issue #71: Are Slop Bowls In Trouble?

As we enter 2026, I am working to shape the future of “Retail Is Not Dead?”. I always value reader feedback, so I have a question for everyone. If you were to summarize “Retail Is Not Dead?” in one sentence, what would you say? Looking forward to seeing the replies!

Are Slop Bowls In Trouble?

When I set out to start “Retail Is Not Dead?”, just about a year and a half ago, one of my goals was to dive deeper into the retail headlines than most others did. I wanted to share insights, takeaways, and learnings that would allow people to operate better, without all the doom and gloom that positioned retail as a dying (not evolving) industry. Recently, I feel like I have seen a similar sentiment surrounding the Slop Bowl fast casual restaurants. For those unaware of the term, “Slop bowl” is a term of endearment(ish) that many use for the mash of ingredients served up at fast-casual establishments, like Chipotle, Cava, and Sweetgreen. They haven’t had the best run of results recently, but the headlines have gone a little too far in my opinion. Headlines I have seen included “Can Anything Save Sweetgreen Stock Now?“ and “Chipotle (CMG) Was Supposed To Be A Winner“. A little sensationalist and lacking strategy for my liking. Sure, these restaurants have been struggling recently, however, there are some key fundamental issues with the narrative around the reason for their struggles.

For starters, these restaurants were overvalued from a stock price perspective. These are not tech companies. You can’t just flip a switch, click some buttons, and boom, you have high growth, high margin revenue. Instead, growth is slower, more methodical, and requires a different type of investment. Still, the market was historically treating these companies like they were tech companies. Here is the revenue multiples they were trading at the end of Q3 (with some others thrown in as well for examples):

• Chipotle was trading at 4.5x revenue

• Sweetgreen was trading at 1.5x revenue

• Nvidia was trading at 19.7x revenue

• Cava was trading at 6.1x revenue

• Dominos was trading at 0.8x revenue

• Wing Stop was trading at 9.9x revenue

• Restaurant Brands International (Burger King, Popeyes, etc.) was trading at 2.9x revenue

Valuations have come down, but you can still see what a bump these companies are getting for being newer and more tech-focused. The upside is that these startups will be able to grow into large companies revenue-wise, but the downside is that they will always be lower-margin businesses. At the end of the day, people need to eat, and restaurants need to exist to feed them, but the margin profile is always going to mean a different investment return. Short-term gains are instead swapped for long-term frequency and customer loyalty. Just a difference in the operating model.

On top of these valuation issues, the struggles are not an isolated incident. It is happening across the restaurant industry as customers are cutting back on discretionary spending across the board. For instance, I want to highlight a particular issue about the discourse around the Chipotle CEO’s comments regarding younger consumers. Chipotle CEO mentioned that their core demographic is younger consumers, who are hurting the most in terms of discretionary income. There was a copious amount of pushback that this was somewhat of a weak excuse, which was warranted, but it misses the mark that these businesses are building lifetime value. Personally, I go to Chipotle every month or so, and will continue to do so for the foreseeable future. Over the course of my lifetime, I am sure I will spend a decent amount of money at Chipotle, and many others like me will do the same. As discussed in Issue #70, brand loyalty is built early on. As an operator with a long-term horizon and an immature business, I would rather focus on those that can grow with me. I would much rather be in Chipotle’s position than a Jack in the Box, whose same-store sales fell 7.1% in Q3, or an Applebee’s same-store sales fell around 5.9% in Q3.

However, they say every rule has an exception, and for me, the exception to that rule is Sweetgreen. I have written about this before, but I am struggling to see where they go from here. I am glad that they are focusing on the core business by selling Spyce to Wonder, but I am not sure where they go from here exactly. LTO’s are a good start, but they need to improve the core economics, grow store count further, and rely less on third-party digital orders. Pure speculation here, but I wonder how long until we start to see rumors of someone like a Roark Capital taking them private. Sweetgreen probably jumped the gun a little early by going public when it did. Being private (and maybe even franchising too?) could allow them to really focus on scaling the core business.

Overall, I think these businesses will persist over time and be fine, but just like anything in retail, it is an evolution, not an ending!

NYC Adds Two New Grocery Stores

For a while now, NYC has been one of the hotbeds of emerging grocers. Startups like PopUp Grocer and Happier Grocery have launched in the city, bringing innovative concepts to market, albeit without scaling yet. This week, two more new grocers launched, and here are the details:

• First Bloom - Founded by food writer and cookbook author Alison Roman, First Bloom is an elevated Corner Store located in the Hudson Valley. It features local items across a variety of categories, like dry grocery, local produce, and housewares. It is a true shoppy shop. The pop up, located in the Lower East Side, will have a similar vibe and curation of merchandise.

• Meadow Lane - Located in Tribeca and founded by TikToker Sammy Nussdorf, Meadow Lane is a premium grocery store featuring prepared foods and grocery staples. The store is very carefully curated and designed. Nussdorf has been documenting the entire process on his TikTok, which has helped generate buzz around the store launch.

Has anyone visited either store yet? I am excited to hopefully check them out!

Investindustrial Acquires TreeHouse Foods: Private Label Takeover

This week Investindustrial announced that it would be acquiring TreeHouse Foods. I bet you have never heard of either of these companies (I certainly had not). Both these companies are in the food production space. TreeHouse Foods is most notably a major provider of snacks and beverage private-label items for large grocers. Investdustrial does similar activities, except it is based in Europe and focuses on a broader variety of private label food, not just beverages and snacks. What is interesting here is that this partnership underscores the growth of private label in the United States. Europe has the most mature private label market at 39% penetration. The United States has been spending much more on Private Label, and it is one of the fastest-growing departments in most mainstream grocery stores. As customers focus on value more, it makes sense that this will continue to grow. I am not sure how much more there will be to follow with this specific partnership, but the private label space is certainly one to monitor!

DoorDash Releases Local Commerce Report

Inspired by Ramp and others who have used the data from their platform, hired economists (or data scientists), and leveraged the findings for earned media or additional sales/partnerships, DoorDash has also hopped into the economic content business. This week, it announced the local commerce report. Here are some of the takeaways I found interesting:

• Everyday essentials prices have stabilized

• Downtowns are growing again with return-to-office, and lunch orders are on the rise

• More families are moving to the Midwest and the South

• Restaurant prices have stabilized

• Consumers are spending more on restaurants and eating out

• Fewer restaurants are closing and more are opening up

What are your favorite takeaways?

Additional Links:

1. Bain Capital Partners announces a new fund, Prosper Growth Partners, to acquire and scale franchise businesses (read more here)

2. A UConn startup is finding new ways to reduce food waste by preserving food longer (read more here)

3. Paperboy Ventures Launches CPG Fund to complement media arm (read more here)

4. With the passage of the latest government funding bill, Hemp THC items are being banned (read more here)

5. Gopuff announces $250M fundraise (read more here)

6. Omission > Nutrition (read more here)

7. Feast & Fettle CEO reflects on why it shut down its retail stores & a good lesson in opportunity cost (read more here)

8. Bonside announces $100M partnership to deploy capital in scaling retail businesses (read more here)

9. Gopuff announces partnership with Starbucks to deliver throughout NYC (read more here)

10. Walmart CEO Doug McMillon to retire (read more here)

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