(Bloomberg Gadfly) -- If it wasn't clear already, it became abundantly obvious this week: Investors thought Shake Shack Inc. was something it wasn't.
The burger chain reported Thursday evening that same-store sales -- a measure of sales at restaurants open at least two years -- declined 1.8 percent in the latest quarter from a year earlier. The company again cut its guidance for same-store sales for the full year, forecasting a decline of between 2 and 3 percent. Revenue grew 37.4 percent over the same period in 2016, which sounds good until you consider that was slower than the growth recorded in the previous three quarters.
Those are lousy results for an upstart restaurant business, and they are part of a discouraging pattern that has emerged in the past several quarters.
The run of lackluster earnings reports has kept a lid on Shake Shack's stock price, which has settled into a range far lower than its 2015 peak.
To understand what happened here, it helps to rewind to January 2015, when Shake Shack had its stock market debut and saw its shares more than double in its first day of trading.
Back then, the fast-casual restaurant category was on a tear. For example -- and it may be hard to remember, given all its recent trouble -- Chipotle Mexican Grill Inc. was in something of an imperial era. Comparable sales rose a blistering 16.8 percent in 2014, even as it opened 192 new restaurants. It was doing an impressive job of both hooking new customers and building repeat business.
Technomic, a food-service industry research firm, estimated fast-casual sales rose 11.6 percent in 2014, far better than the 2.8 percent increase at fast-food joints or the 3.5 percent increase seen at full-service restaurants.
Just as being the "Uber of such-and-such business" became a trope in Silicon Valley, being the "Chipotle of such-and-such cuisine" became one in the restaurant industry. Everybody wanted a piece of the action, the chance to be on the ground floor of a dining powerhouse built for the 21st century.
But Shake Shack is not the next Chipotle because, frankly, it's going to be very hard right now for any business to be what Chipotle was in its glory days.
And that's in large part because the fast-casual business has gotten incredibly crowded. NPD Group, a market research firm, has found that, in the fall of 2016, the United States had 74 fast-casual restaurant units per million people. That is up sharply from 2007, when there were 41 such restaurants per million people.
Sure, expansion of big-name chains such as Panera Bread Co. and Zoe's Kitchen Inc. are contributing to greater competition.
But NPD also has found that more "micro-chains" -- restaurant businesses with three to 19 outposts -- are popping up in some major metropolitan areas, giving diners new options. In other words, the fast-casual category has matured, and so pulling down dollars there now is less about filling a void in the marketplace and more about grabbing share from competitors.
It's not just Shake Shack. Habit Restaurants Inc., the parent of Habit Burger Grill, has seen its same-store sales growth cool off considerably.
Not long before Shake Shack, Habit also made a splashy IPO debut. But that juice is long gone.
Both chains are trying to brush off these worries. Shake Shack boasted it expects new company-operated restaurants it is opening this year to deliver average annual sales volumes of $3.4 million, a figure that looks impressive compared to volumes at individual locations of its competitors.
And Shake Shack likes to stress that its base for same-store sales is still small, comprising just 37 of its 134 locations. Weird weather blips or other seasonal factors can look especially pronounced with a relatively small sample.
But that doesn't change the fact that restaurants in Shake Shack's same-store sales base saw a 4.3 percent decline in traffic this quarter compared to a year earlier. Whatever the reason, that's a concerning figure for a company that's supposed to be in growth mode.
Meanwhile, Habit plans targeted and mass-marketed promotions in the back half of the year and limited-time offers such as the Hatch Chile Charburger. Habit also expects to open eight to 10 drive-thru locations this year, which will set it apart from other fast-casual chains.
That may prove wise, as the burger business these days looks much better from the drive-thru window. McDonald's Corp. last week continued a streak of solid comparable sales growth. Things have recently picked up at Burger King, with parent company Restaurant Brands International Inc. reporting on Wednesday that the chain's comparable sales in the quarter were up 3.9 percent over a year earlier.
Shake Shack and Habit may very well turn out to be healthy businesses over the long haul. But whatever the "better burger" chains cook up next, temper your expectations. The fast-casual sector still has plenty of promise, but it's a lot harder these days for individual restaurants to go on a rocket ride.
This column does not necessarily reflect the opinion of Bloomberg LP and its owners.
Sarah Halzack is a Bloomberg Gadfly columnist covering the consumer and retail industries. She was previously a national retail reporter for the Washington Post.