Business
In the absence of jobs numbers, slop bowls and fast food can show a lot about the economy
Sure, we still don’t have jobs numbers, but there’s a lot you can learn from a slop bowl.
A spate of fast food and fast casual restaurants reported earnings last week, including Cava and McDonald’s, while Chipotle reported the last week of October.
Taken together, they paint a portrait of a cash-strapped consumer, particularly on the lower end of the earnings spectrum, as job growth weakens.
True to this, not new to this. McDonald’s has often served as a harbinger of economic stress. And if comments from the company in the last year are any indication, low-income consumers continue to feel the pinch.
“We continue to see a bifurcated consumer base with [quick-service restaurant] traffic from lower-income consumers declining nearly double digits in the third quarter, a trend that’s persisted for nearly two years,” McDonald’s CEO Chris Kempczinski said on the company’s November 5 earnings call. “In contrast, QSR traffic growth among higher-income consumers remained strong, increasing nearly double digits in the quarter.”
That’s the K-shaped economy you’ve been hearing about. Kempczinski added that financial pressure on low-income consumers will likely continue into 2026.
“Right now, you’re seeing across the country, rents are at pretty high levels. You’re seeing food prices, whether it’s in restaurants or grocery, you’re seeing food prices are high, you’re seeing child care is high,” he said. “So long as that consumer cohort is feeling like real incomes are under pressure, I wouldn’t expect to see significant change there.”
Of a certain age. Meanwhile, Chipotle and Cava both voiced concern about pullback from a key demographic for the two fast casual chains: the coveted mid-twenties to mid-thirties cohort.
“The 25-to-34-year-old demographic is a consumer that has experienced higher than average unemployment, also has been faced with student loan repayments,” Cava CFO Tricia Tolivar told CFO Brew. “Beginning in late spring, we started to see that consumer [demographic] spend a little bit less with us, certainly not reducing share, but just not as ebullient as it had been in prior years.”
Similarly, Chipotle CEO Scott Boatwright noted on the company’s October 29 earnings call that the same demographic “has pulled back meaningfully.”
Notably, both Cava and Chipotle both said they gained market share, suggesting that the younger demographic isn’t moving away from those restaurants, necessarily—they’re likely just cooking at home.
“We’re not losing them to the competition, we’re losing them to grocery [stores] and food at home,” Boatwright said on the call. “That consumer is under pressure. It is one of our core consumer cohorts, and so they feel the pinch, we feel the pullback from them as well.”
“There is definitely pressure out there for the consumer, and oftentimes restaurants are one of the first areas of the consumer spending that is feeling it,” Tolivar told us.
Beyond that demographic-specific challenge, Cava and Chipotle had slightly different messages about lower-income consumers.
“Earlier this year, as consumer sentiment declined sharply, we saw a broad-based pullback in frequency across all income cohorts,” Boatwright noted. “Since then, the gap has widened, with low to middle-income guests further reducing frequency.”
Revenue from guests with household incomes below $100,000 “represents about 40% of [Chipotle’s] total sales,” he added, and the company’s internal data suggests that the group “is dining out less often due to concerns about economy and inflation.”
Cava, however, had a bright spot to share with respect to low-income consumers, which Tolivar credited to the company’s pricing actions.
“At Cava, when we look at our restaurants based on median household income in their market area, we did see higher same restaurant sales in our lower income markets,” she said. “And what that tells us is that as we’ve been thoughtful on pricing over time, we’ve created a product that is more accessible to consumers in lower income brackets.”
Since 2019, Tolivar explained that Cava has “underpriced CPI by 10%, and when you compare our price increases from that time to the end of September of this year, we actually raised prices half of what the rest of the industry did, and that creates a compelling value proposition.”
In trying times, value might just be the name of the game.
This report was originally published by CFO Brew.
