Restaurant Chains See Investor Activism, Growth
Several restaurant chains are experiencing significant investor activity. CAVA reported 21% revenue growth but faces headwinds from new unit expansion. Meanwhile, an activist investor expressed confidence in a turnaround at Noodles & Co., and Jack in the Box is facing a high-stakes boardroom battle with an activist investor.
- The activist investor at Noodles & Co. is Galloway Capital Partners, which recently increased its stake in the company to 8.8%. Initially, Galloway urged the chain to sell approximately 200 of its 349 company-owned restaurants to generate an estimated $60 million, which would be used to pay down high-interest debt. - Before the activist involvement, Noodles & Co. had already begun its own turnaround efforts, which include closing underperforming restaurants. The company closed 33 locations in 2025 and plans to shut down an additional 30 to 35 restaurants. - The activist investor targeting Jack in the Box is Sardar Biglari of Biglari Capital, which holds a 9.9% stake in the fast-food chain. The firm is leading a campaign to remove Board Chairman David Goebel, citing "catastrophic value destruction" under his leadership. - The conflict at Jack in the Box follows a steep decline in performance, with the company's stock value dropping by about 50% in the past year and over 80% in the last five years. The company also reported a 6.7% decrease in same-store sales in its most recent fiscal quarter. - Proxy advisory firms are divided on the Jack in the Box situation; Glass Lewis and Egan-Jones have recommended shareholders vote against Goebel, while the larger firm, Institutional Shareholder Services (ISS), has backed the current board. - CAVA's expansion plans for 2026 include opening 74 to 76 net new restaurants, with projected pre-opening costs of $19.5 million to $20.0 million. - Despite its rapid revenue growth, CAVA has seen its same-restaurant sales growth slow from double digits to a range of 1.9% to 2.1% in mid-2025. The company projects same-restaurant sales growth to be between 3.0% and 5.0% for fiscal 2026. - Activist investors are increasingly targeting the restaurant industry because the business models are relatively easy to understand and present clear opportunities to increase shareholder value, such as selling off company-owned stores to franchisees or improving operational efficiency.
