CNBC: John Cassimus: State of the Restaurant Industry

Same-store sales, customer traffic, and share prices are all down and continue to decline in the restaurant industry. Shares of Chipotle plunged 44 percent last year while Fiesta Restaurant shares declined 35 percent. Has something changed in this segment that has made diners stop going out to eat? Former CEO of restaurant Zoe’s Kitchen, John Cassimus, stopped by Mad Money to discuss the state of the restaurant industry. Cassiumus, who took his parent’s restaurant and developed it into a regional brand, knows what it is like to grow a brand and survive through the ups and downs.

There are many factors driving the declining numbers in the restaurant industry, but Cassimus explains that one main reason is that there so much competition in the industry. “It’s growing at a pace where there are more seats than diners,” said Cassimus. Small fast startups, mom and pop restaurants, and food trucks are all competing for a share of consumers’ cash. With household incomes remaining the same in the last seven years and the uncertainly of the election lingering, consumers are holding out on dining out and this is creating the perfect storm for declines in restaurant performance.

How can brands stay afloat and succeed despite the conditions? Cassius explains, “The nimble brands and the brands that can adjust--which fast casual is really good at-- those that can cut back and remain their profitability to weather the storm, will be the ones to succeed.”

Cassimus goes on to explain that not everybody is going to make it and those that have the strongest brand will make it over the next several years. His advice after developing his own brand is not to grow too fast and don’t be afraid to have a few slow quarters if you’re making progress to accomplish your long-term goals.

Watch the full segment here.