Chipotle and Shake Shack Help Solve an Economic Puzzle
The decline in immigration and international tourism to the US is having a very real economic impact, even if it may not be showing up in the broad data just yet.
No in the mood?
Photographer: Bloomberg/Bloomberg
A string of disappointing earnings results has sparked large declines in the stock prices of multiple fast casual food companies, including Cava Group Inc., Sweetgreen Inc., Shake Shack Inc., Chipotle Mexican Grill Inc. This has raised questions about the state of consumption as the US economy absorbs tariffs and job growth slows. So although the overall data on spending suggests there’s nothing to panic about just yet, the geographic footprint of some of those chains provides some answers.
In short, these companies are overexposed to critical coastal metro areas that are immigration hubs and popular international tourism destinations, as well as overwhelmingly Democratic places in an environment where economic sentiment among that political group has soured to record lows. The fast casual restaurant industry may be the real key in solving the puzzle for how the US consumer appears resilient even though government policies are dissuading foreigners from entering the US.