America's "fast-casual" restaurant boom appears to be hitting a wall. Chains like Chipotle, Sweetgreen, and Cava—once the darlings of millennial and Gen Z diners—are reporting slumping sales and falling stock prices, reports Quartz, which goes so far as to say that "a restaurant recession could be underway." The "fast-casual" label might be epitomized by Chipotle—chains that promise healthier meals than standard fast-food fare, but with higher prices. The business model has worked for years, but Chipotle shares continued a yearlong drop last week after its latest earnings report revealed barely-there same-store sales growth and shrinking margins.
Younger customers are "just eating with us less frequently, and they're eating at home more often," Chipotle CEO Scott Boatwright tells the Wall Street Journal. He blamed "persistent macroeconomic pressures" as the reason: Think layoffs, inflation, rising loan payments, higher health insurance costs, etc. As Sweetgreen CEO Jonathan Neman puts it, "It's pretty obvious that the consumer is not in a great place overall."
It all adds up to the trend of younger and lower-income Americans skipping the $12 salads and burrito bowls—and perhaps replicating them on the cheap in their own kitchens. A recent PwC survey found that over half of Gen Z respondents plan to cut back on restaurant spending in the coming months. So far this year, Chipotle's stock is down 50% and Sweetgreen's is down 80%.
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