Several major U.S. restaurant chains have recently issued warnings about a slowdown in consumer spending. As inflation persists and job growth weakens, cracks are emerging in the U.S. economy.

Well-known brands like McDonald's and Chipotle have cautioned that low-income customers are cutting back on spending. This trend could significantly impact the broader economy, as consumer spending accounts for roughly two-thirds of U.S. economic activity.

The latest report released on Friday showed that U.S. consumer sentiment in November dropped to its lowest level since 2022, according to the University of Michigan survey. Shortly before this data was published, the New York Federal Reserve reported that U.S. household debt levels had climbed to a record high.

Here’s how some major chains have responded to the spending weakness and its potential economic implications:

**McDonald's** McDonald's CEO Christopher Kempczinski warned analysts this week that low-income customer traffic across the industry had declined by "nearly double digits." Kempczinski noted that higher-income customers helped offset the dip, supporting overall revenue. For the full year through September, same-store sales grew 2.4%, slightly down from the 2.5% increase in the previous quarter.

While low-income consumers pull back, food prices continue to rise. A company fact sheet revealed that McDonald's menu prices have increased by an average of 40% between 2019 and 2024. The company stated it is absorbing some costs of its "value meals" to ease price pressures on budget-conscious customers.

**Chipotle** The Mexican fast-casual chain, which operates thousands of locations nationwide, blamed weaker-than-expected sales on softening consumer demand in its recent earnings report. The company projected that same-store sales—a key metric for existing locations—would decline in 2025, reversing earlier growth forecasts.

CEO Scott Boatwright noted on the earnings call that "ongoing macroeconomic pressures" have widened the gap between low-income and affluent customers. He added that customers earning under $100,000 annually account for about 40% of Chipotle’s sales, and they are dining out less due to "concerns about the economy and inflation." Since its earnings release last week, Chipotle’s stock has plunged over 20%, bringing its year-to-date decline to 50%.

**Sweetgreen** The fast-casual chain Sweetgreen has struggled in recent months, with same-store sales dropping nearly 10% year-over-year in the quarter ending September—a sharp contrast to its roughly 5% growth forecast for the full year ending September 2024. CFO Jamie McConnell said on Thursday’s earnings call that the company is "seeing a pullback in consumer spending power," particularly among lower-income and younger customers.

"Consumers aged 25 to 35 are under the most pressure, representing about 30% of our customer base," McConnell added, revealing that sales for this demographic fell roughly 15% last quarter. He also noted significant declines in Sweetgreen’s core markets—the Northeast and Los Angeles—which contribute over half of its revenue.

**Wingstop** The chicken wing chain Wingstop reported this week that sales have weakened in regions with higher concentrations of low-income consumers. CEO Michael Skipworth told analysts that the softness has spread to "more geographies," with some middle-income consumers also affected. U.S. same-store sales fell over 5% year-over-year in the three months ending September.

"We believe this is temporary," Skipworth said, though he acknowledged, "No one knows how long this will last."