Are We in a Fast-Casual Restaurant Recession?

Summary

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WSJ What’s News – Episode Summary

Episode Title: Are We in a Fast-Casual Restaurant Recession?
Date: November 16, 2025
Host: Caitlin McCabe
Guests: Heather Haddon (Restaurants Reporter), Matt Grossman (Economics Reporter)

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Overview:

This episode explores the decline in popularity of fast-casual restaurant chains like Chipotle, Sweetgreen, and Cava among young Americans, particularly Gen Z and Millennials. The discussion delves into the economic pressures facing these age groups, the impact on restaurant sales, and what this trend indicates about broader consumer behavior and the U.S. economy.

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Key Discussion Points & Insights

1. The Rise and Fall of Fast-Casual (00:34–01:40)

• Background:
  Over the past decade, fast-casual chains became dominant, particularly among younger consumers seeking "build-your-own" meals with fresh ingredients, willing to pay a premium over traditional fast food (00:34).
• Current Shift:
  Recent financial data shows a downturn in visits from younger customers (01:10).

“Chains like Chipotle, Sweetgreen and Cava are falling out of favor with Gen Z.”
— Caitlin McCabe (00:37)

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2. Economic Pressures on Young Consumers (03:09–04:27)

• What Executives are Saying:
  Younger consumers (25-35) are being blamed for slower sales. Factors cited include return of student loan payments, rising insurance and childcare costs, along with flat wage growth (03:09).
• Not a Total Abandonment:
  Young adults aren’t completely giving up these brands but are visiting less frequently.

"They're not abandoning the brands totally, but they're just not coming in as much as they were."
— Heather Haddon (03:33)

• Labor Market Context:
  Companies are cautious about hiring and investment, which disproportionately affects younger job seekers (03:51).

"Younger people are having a tougher time now finding those opportunities than certainly they were a few years ago.”
— Matt Grossman (04:18)

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3. Effects on Restaurant Performance and Stocks (04:27–05:48)

• Earnings Impact:
  • At Chipotle, 25–35-year-olds represent 25% of sales.
  • Same-store sales declines and reduced future outlooks at Chipotle and Sweetgreen (Sweetgreen down 9%) (04:42).
  • Stocks have taken significant hits; some see opportunity, but overall sector is weak (05:10).

“In general, restaurant stocks have just been hammered this year… they're viewed as discretionary spending.”
— Heather Haddon (05:29)

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4. Is This Cyclical or Structural? (05:48–06:43)

• Uncertain Outlook:
  Debate whether this trend is part of a normal cycle or a structural change due to factors like AI-driven entry-level job shifts (05:59).

“Is that because companies are starting to experiment with using artificial intelligence to do some of the entry-level functions that these young people might have done in the past? That's a question that economists feel like they do not have good answers about yet.”
— Matt Grossman (06:29)

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5. Broader Consumer Trends (06:43–08:00)

• Spending Across Other Categories:
  Credit card data shows small declines across travel, lodging, and entertainment—generally 3–5% down year-over-year (06:51).
  • Some exceptions: Delta Airlines reports ongoing strength among younger travelers; Six Flags sees increased price sensitivity (07:35).

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6. The Economic Significance of Young Adult Spending (08:49–09:26)

• Impact on Economy:
  While not the largest group, spending by 20- and 30-year-olds is volatile and can swing quickly with changes in personal financial health.

“Young people's spending can swing a lot faster.”
— Matt Grossman (09:15)

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7. Pullback or Preference Shift? (09:26–10:39)

• Data and Marketing:
  Chains may be latching onto the “25–35 year-old” explanation, but advanced consumer data confirms a slowdown.
  • Companies are deploying digital engagement tactics (games, trivia, student programs) to win back young spenders.
  • Market saturation and increased at-home cooking may also play a role.

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8. Company Responses & the Search for New Growth (10:39–11:29)

• Strategic Shifts:
  • Expansion into overseas markets (Middle East, Mexico) seen as new frontiers.
  • Increased investment in digital/social media marketing—comes with higher costs and organizational challenges.

"We've created a whole in-house social media team because we realized that's where consumers are and that's where you have to advertise and figure things out."
— Heather Haddon, quoting a CEO (11:11)

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Notable Quotes & Memorable Moments

• “Chains like Chipotle, Sweetgreen and Cava are falling out of favor with Gen Z.”
  — Caitlin McCabe (00:37)
• “They're all blaming 25 to 35 year olds for a slowdown in their sales.”
  — Heather Haddon (03:09)
• "Younger people are having a tougher time now finding those opportunities than certainly they were a few years ago.”
  — Matt Grossman (04:18)
• “In general, restaurant stocks have just been hammered this year… they're viewed as discretionary spending.”
  — Heather Haddon (05:29)
• “Is that because companies are starting to experiment with using artificial intelligence... that's a question that economists... do not have good answers about yet.”
  — Matt Grossman (06:29)
• "We've created a whole in-house social media team because we realized that's where consumers are...”
  — Heather Haddon (11:11)

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Important Timestamps

| Segment | Timestamp | |-----------------------------------------------|------------| | Setting the scene: Young consumer pullback | 00:34 | | Companies blame young adults for slow sales | 03:09 | | Labor market challenges for young workers | 03:51 | | Earnings impact at fast-casual chains | 04:42 | | Discretionary spending slump, stock declines | 05:10 | | Cyclical vs. structural debate | 05:59 | | Broader spending trends (travel, retail) | 06:51 | | Economic impact of young consumer spending | 09:02 | | Company responses and marketing strategies | 10:54 |

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Tone and Style

The episode is informative, analytical, and peppered with industry lingo as befits a Wall Street Journal show. The mood is probing but practical, with the hosts and guests emphasizing both concrete data and open-ended economic questions. While there is concern over the fast-casual sector, there is also an acknowledgment of shifting norms and the resilience—and adaptiveness—of both consumers and businesses.

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For listeners or readers—this episode unpacks the real economic headwinds facing a generation, what it means for dining (and beyond), and how companies are preparing for an uncertain but evolving future.

Transcript

[A]

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[B]

Hey, what's news listeners? It's Sunday, November 16th. I'm Caitlin McCabe for the Wall Street Journal and this is what's New Sunday, the show where we tackle the big questions about the biggest stories in the news by reaching out to our colleagues across the newsroom to help explain what's happening in our world. On the show this week, we're taking a look at the young American consumer and why they're starting to break up with fast, casual restaurants. You could call it burrito belt tightening or a salad slump, but one thing is clear. Chains like Chipotle, sweetgreen and Cava are falling out of favor with Gen Z.

[C]

And Millennials, the younger cohort that 25 to 35 nutrition. They don't have the steam that they had last year in the way that they were visiting or their frequency of visiting. So the 25 to 35 consumer is the most under pressure and they make up about 30% of our consumer base and they're about 15%. We believe that this trend is not unique to Chipotle and is occurring across all restaurants, as well as many discretionary categories.

[B]

This shift is raising questions among analysts and investors about what's ahead for these companies. But more broadly, it's also sparked concern about the economic health of this age group and what it means for the U.S. economy. To help unpack it all, I'm speaking with two Wall Street Journal reporters who are experts in this space. Let's dive in. A little over a decade ago, one of my colleagues at the Wall Street Journal wrote a story highlighting an interesting phenomenon. She had found more than 40 restaurants that have been described in news reports as being the chipotle of their cuisine. Think the Chipotle of pizza, the chipotle of sushi, the chipotle of Asian rice bowls. It spoke to the restaurant zeitgeist of the moment. Customers, especially young ones, were craving build your own meals that featured fresher ingredients than what you could get at traditional fast food chains, even if that meant spending a little more. But now financial results show young customers aren't visiting these restaurants as much as they once did. So what's going on here? I'm joined by Heather Haddon, the Journal's restaurants reporter, and Matt Grossman, an economics reporter, to help explain. Heather, let's start with you. You've been paying close attention to these earnings reports in recent weeks. What are you hearing from executives at these mid tier, fast casual restaurant chains?

[D]

They're all blaming 25 to 35 year olds for a slowdown in their sales. And they've really gotten granular about what's happening to these folks. Them having to pay student debt back, rising costs for everything from insurance to childcare, and just wage growth being stagnant. And they've said that these kind of pressures means that these folks, they're not abandoning the brands totally, but they're just not coming in as much as they were.

[E]

Matt, you cover economics. Heather just mentioned a host of pressure points that these younger Americans are facing right now. Can you just give us a little bit more context about what's going on in the economy with this age group specifically?

[C]

It's been a really difficult time in the labor market for people in this age group. A lot of companies have really been playing it as a kind of wait and see strategy where they aren't necessarily laying a lot of people off, but they're also not really in the mood to make big investments in the future of their workforce. And younger people really bear the brunt of that because when a company brings in somebody new, it's often a younger person where the company might need to invest in training and getting them off the ground. And so, you know, younger people are having a tougher time now finding those opportunities than certainly they were a few years ago.

[E]

And so with that being the backdrop, how significant of a dent, Heather, is this having on company financials? Can you get a bit more specific about what companies are saying in terms of how this is affecting sales and profit?

[D]

Chipotle said that these 25 to 35 year olds were something like 25% of their sales. That's a lot. So Chipotle reported same store sales decline. They also reduced their outlook for same stores sales increases this year for the third consecutive quarter. And Sweetgreen, they are really challenged right now. Their same store sales are down 9%. And all these companies have taken a stock hit as well.

[E]

You mentioned the stock prices. I've been pretty fascinated by watching what's been happening with these stocks. A lot of them down just double digits in one month alone. What are analysts saying about that?

[D]

Well, some of them are saying it's a great time to buy, get it while it's good. Talking to Chipotle and Cava executives, they say this is cyclical. They're going through something now. They're going to get these folks back and the stock's going to improve. But in general, restaurant stocks have just been hammered this year. They are just not in favor because they're viewed as discretionary spending. And discretionary spending is not what Americans really want to be doing right now.

[B]

Matt, what do you make of these comments? Is this a cyclical period for Gen Z and Millennials? Do we expect their financial and economic prospects to get better?

[C]

It could really go either way. On the one hand, if this is more about companies not being sure about which way the business climate is going to go because of tariffs, at some point soon we're going to get answers to that. Either tariffs will stabilize or we'll learn that there's some drag on the economy. On the other hand, in the situation we've been in where it's taking younger people longer to find jobs, perhaps they're not having those thriving early career experiences where they're going to the office every day and then eating at these restaurants for lunch and dinner. Is that because companies are starting to experiment with using artificial intelligence to do some of the entry level functions that these young people might have done in the past? That's a question that economists feel like they do not have good answers about yet.

[E]

Matt, do we know if this is translating across other categories like retail or travel or entertainment?

[C]

Because the government shutdown we haven't been getting the government data that we rely on for the past six weeks or so. We have to look at other sources for this instead. When you look at credit card spending data, for example, this is information that the banks put out based on how their credit card users are spend. A lot of these categories are down a little bit from a year ago. If you look at things like lodging, travel, airfare, you're seeing that the spending's down in the mid single digit percentages 3%, 5%. So not anything drastic there. But it's certainly not trending in the right direction. Prices are still going up faster than anybody wants and that definitely doesn't help. When you look at what other companies in the space are saying, it does vary a bit. Delta Airlines has said a couple times in the past few months that young people are actually very strong customers for them, that you're seeing strong loyalty and propensity to travel on the other hand, Six Flags executives have said that they're really seeing a lot of price sensitivity, that a lot of their younger customers are less willing to go out and spend a lot of money on a fun day out.

[B]

Coming up, we explore how this shift is echoing through the broader economy and how these companies are responding. That and more after the break.

[F]

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[B]

Picking up where we left off, Matt, I think the big question that everyone is wondering is what does this mean for the broader American economy? How much do 20 and 30 year olds drive economic spending?

[C]

They're not the most important spending bucket, in part because they're just not the wealthiest Americans. On the other hand, younger people's spending can be a lot more variable. If you're a younger person, an extra hundred dollars or thousand dollars could really go a long way in determining how much you're spending and what your plans are. And so in that sense, young people's spending can swing a lot faster.

[E]

So Heather, how much of this do you think is a pullback from this group due to economic pressures or how much of it is just shifting consumer preferences? Do we know anything about that?

[D]

It's hard to totally know, but once Chipotle came out with this 25 to 35 year old slowdown that Kava and Sweetgreen then all just adopted it as well. So that does seem to say that maybe they've all decided that this is a good thing that they can point to. And I'm sure there's truth to it. These restaurant chains now have credit card data and other ways to analyze their consumers in ways that they didn't prior. And you look at what Chipotle is doing to try to improve sales, it's very focused on some of these younger consumers including like digital games to get free food, like share your knowledge of Chipotle trivia and this like College U program to try to get college students. A lot of these chains have been growing very fast, but naturally there is going to be a bit of a slowdown as just fast casual gets more and more crowded, there's more competitors, there's more options, and probably some people have learned to cook more at home.

[E]

If this trend is relatively long lasting, this seems bad for places like Chipotle and Sweetgreen that really built a business model on courting younger customers. How should we expect companies to respond.

[D]

To it is interesting that a lot of these chains like Sweetgreen or Chipotle are now looking at overseas. Maybe that's where their future lies, is expanding in the Middle East. Even Mexico are places they're looking at to grow. And when I was talking to the CEO of Dime Brands which owns Applebee's, was like we've created a whole in house social media team because we realized that's where consumers are and that's where you have to advertise and figure things out. But it's not cheap. You have to get your board to agree to spend a lot of money to invest. And so we'll also have to see if they have the balance sheet to do that.

[B]

That's Heather Haddon, the Journal's restaurants reporter.

[E]

And Matt Grossman and economics reporter. Thanks to both of you for being here.

[D]

Thanks so much.

[C]

Thank you.

[B]

And that's it for what's new Sunday for November 16th. Today's show is produced by Zoe Culkin with supervising producer Sandra Kilhoff and Deputy editor Chris Chris Sinsley. I'm Caitlin McCabe and we'll be back tomorrow morning with a brand new show. Until then, thanks for listening.

[A]

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[D]

Com.