Decreasing consumer spending has taken a bite out of fast food stocks. The S&P 500 Restaurants Index has dropped over 10% since March, while the S&P 500 is up ~5%. Notably, Chipotle’sCMG

stock has tumbled over 20% in the past month despite reporting strong earnings this week.

• Investors are concerned about shrinking consumer spending — a sentiment echoed by Chipotle’s CEO, who noted, “Demand for [Chipotle’s] food peaked in April.”
• Since March, major chains like McDonald’sMCD
  and StarbucksSBUX
  have seen their stocks fall by ~13% and ~20%, respectively — and the former is trying to counteract this trend by extending its $5 deal to attract more customers.

Supersized meals, not wallets: Per Revenue Management Solutions, fast food traffic in the US dipped by 3.5% in Q1 2024 compared to last year — as the consumer spending outlook continues to decline. With inflation squeezing budgets, more people are opting to eat at home. A recent Lending Tree survey found that over half of US consumers are cutting back on fast food spending due to high prices, with nearly 80% considering it a luxury. As wallets and waists tighten, the only thing getting supersized these days is consumer frugality.