Restaurants from IHOP to Chipotle sound alarm over tariffs spooking customers into staying home

New York Post

5 days ago

Fast-food chains from IHOP to Chipotle are feeling the pain as fears about stubbornly high prices and a shaky job market have pushed more Americans to eat at home.
Americans ate 1 billion fewer meals at restaurants between January and March than they did the year before, according to data from market research firm Circana.
That decline has set off alarm bells for executives at IHOP and Applebee's owner Dine Brands, Sweetgreen, Wendy's, Denny's and Chipotle Mexican Grill – all of whom have warned that their sales are being hammered by an increasingly cautious US consumer.
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3 IHOP and Applebee's owner Dine Brands warned that sales are being hammered by increasingly cautious consumers.
Christopher Sadowski
Denny's CEO Kelli Valade last week nodded to 'a very choppy consumer environment' while chief financial officer Robert Verostek blamed 'macroeconomic changes' for the company's volatile July sales.
McDonald's has seen its US sales bounce back as the Happy Meal maker leaned into value to attract budget-conscious customers.
But CEO Chris Kempczinski said visits from low-income customers plunged by 'double-digits' between April and June as their incomes declined.
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'The result of that is you're seeing people either skip occasions, so they're skipping…breakfast or they're trading down either within our menu or they're trading down to eating at home,' Kempczinksi said.
'This bifurcated consumer base is why we remain cautious about the overall near-term health of the US consumer,' he added.
McDonald's has ramped up its value offerings and kept its wildly popular $5 Meal Deal on the menu to 're-engage' with low-income diners – who typically visit the Big Mac chain more frequently than middle- and high-income counterparts, Kempczinski said.
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Rivals have been quick to release their own value meals this year – from Taco Bell's Luxe Boxes to $5 meal combos from Burger King and Wendy's.
3 McDonald's has seen its US sales bounce back as it leaned into value to attract budget-conscious customers.
REUTERS
But visits to US restaurants have fallen 1% so far this year compared to 2024, according to market research firm Black Box Intelligence.
Fast-food joints have suffered the worst losses, with traffic down 2.3% in the second quarter compared to last year.
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Even those who have continued to dine out are buying fewer beverages and appetizers or 'trading down' to cheaper menu items, Dine Brands CEO John Peyton said.
Wingstop CEO Michael Skipworth said the chicken-wing chain had seen 'softness' among low-income diners, adding that the company's research uncovered 'concerns about elevated prices, future job prospects, and general anxiety about the future.'
Food inflation has slowed, with prices remaining flat in July from the month before, the Bureau of Labor Statistics said Tuesday.
3 Like many other fast-food chains, Taco Bell released meal deals this year in an attempt to win over customers.
Christopher Sadowski
Yet the cost of eating out has continued to outpace the cost of eating at home – rising 0.3% in July while the food at home index fell 0.1%, according to Tuesday's report.
The costs of dining out are expected to continue outpacing those of eating at home, according to the Department of Agriculture.
'It's going to take a lot of levers being pulled in order to get consumers more comfortable to spend money out of home. And it's not going to be this year,' Sally Lyons Wyatt, a Circana adviser who specializes in the food service industry, told the Financial Times.
Executives have said they remain hopeful that once the anxiety around tariffs eases, customers will return to restaurants and drive-thru lanes.
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'I think much of what we're experiencing right now is due to macro and the consumer, the low-income consumer is looking for value,' Chipotle CEO Scott Boatwright said last month.
'I think as sentiment improves, the business will improve,' he added.