Some restaurant chains are sounding the alarm about consumers

Some major restaurant chains sounded an alarm in recent days about a shopping slowdown, spotlighting a crack in the U.S. economy as inflation worsens and hiring wanes.

Household names like Chipotle and McDonald’s cautioned about flagging purchases among low-income customers. The development could hold significant stakes for the wider economy, since consumer spending accounts for about two-thirds of U.S. economic activity.

A fresh report on Friday revealed a decline in shopper attitudes in November, leaving consumer sentiment at its lowest point since 2022, University of Michigan data showed.

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The survey came days after data from the Federal Reserve Bank of New York showed Americans’ household debt levels have reached a record high.

Here’s what some major restaurant chains are saying about consumer weakness, and what it could mean for the economy:

Chipotle

Chipotle Mexican Grill, which operates thousands of U.S.-based stores, faulted consumer weakness for disappointing sales in an earnings report last week.

Same-store sales, a measure of revenue generated at existing locations, is expected to decline in 2025, Chipotle said, reversing a forecast of sales growth made just months earlier.

On an earnings call, Scott Boatwright, the CEO of Chipotle, pointed to “persistent macroeconomic pressures,” saying the “gap has widened” between low-income and affluent customers.

Customers earning an annual salary below $100,000, who account for about 40% of Chipotle’s sales, are dining out less frequently due to “concerns about the economy and inflation,” Boatwright said.

Shares of Chipotle have plummeted more than 20% since the company released earnings last week, contributing to a 50% drop since the outset of this year.

Sweetgreen

Fast-casual chain Sweetgreen struggled in recent months, reporting a decline of nearly 10% in same-store sales over the quarter ending in September compared to a year ago. That dip in sales marked a sharp reversal from about 5% growth over the previous year-long period ending in September 2024.

Jamie McConnell, chief financial officer and accounting officer, said on an earnings call on Thursday the company is “seeing a step down” in consumer performance, especially among low-income and young shoppers.

“The [age] 25 to 35 consumer is the most under pressure, and they make up about 30% of our consumer base,” McConnell added. Sales to that demographic dropped by roughly 15% in the most recent quarter, he said.

Sales in the Northeast and Los Angeles –- two key regions for Sweetgreen that account for more than half of its revenue –- have shown a noticeable decline, McConnell said.

McDonald’s

McDonald’s CEO ​​Christopher Kempczinski warned analysts this week that traffic among low-income customers had fallen “nearly double digits” across the industry.

Traffic among higher-income shoppers has grown, Kempczinski added, buttressing the company’s revenue. In all, same-store sales increased 2.4% over the year ending in September, marking a slight dip from 2.5% year-over-year growth in the previous quarter.

The losses with low-income shoppers have come alongside a steady increase in prices. The average cost of a McDonald’s menu item jumped 40% from 2019 to 2024, a company fact sheet said.

The company said it is absorbing the cost of some Extra Value Meals in an effort to ease prices for cash-strapped customers.

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Wingstop

Chicken-wing chain Wingstop this week pointed to sales declines in areas made up largely of low-income customers. Speaking to analysts, Wingstop CEO Michael Skipworth warned the flagging performance had spread to “more geographies as well as to the middle-income consumer in some areas.”

The company’s domestic same-store sales declined by more than 5% over the three-month period ending in September compared to the same quarter last year.

“We believe this is only temporary,” Skipworth added, but he acknowledged: “None of us can predict the duration.”