Trade and Immigration Impact on Restaurants
As President Donald Trump’s trade and immigration policies take hold, several popular fast-casual dining chains are showing signs of financial strain. Shake Shack shares fell 7.7 percent after its second-quarter earnings, Sweetgreen tumbled 23 percent following its second outlook cut of 2025, and Cava’s revenue missed expectations due to slower sales growth. Analysts suggest that these results serve as warning signs for the broader U.S. economy.
Coastal Exposure Creates Vulnerability
According to Bloomberg’s Connor Sen, these brands are especially vulnerable because of their concentration in coastal metropolitan areas. Shake Shack operates 80 of its 610 U.S. stores in New York, while one-third of Sweetgreen’s outlets are in New York and California. Cava generates 17 percent of its sales from the Washington, D.C., Maryland, and Virginia region. These areas, often immigration hubs and tourist magnets, are expected to bear the brunt of restrictive policies.
Contrasting Performance with Competitors
Unlike their coastal-focused rivals, chains such as Olive Garden, Longhorn Steakhouse, and Texas Roadhouse are spread across middle America and have not reported comparable setbacks. Employment trends reinforce the divide: New York, Los Angeles, San Francisco, and D.C. recorded a combined workforce reduction of 60,000 in the first half of the year, even as the U.S. overall added 500,000 jobs. Declining international tourism adds to the strain, with New York expecting a 17 percent drop in foreign visitors and California forecasting a 9.2 percent decline.
Shifting Consumer Sentiment
Economic headwinds are compounded by changes in consumer behavior. Research from the University of Michigan shows Democratic-leaning voters, heavily concentrated in these coastal cities, are currently less likely to spend freely than Republicans. For restaurants like Shake Shack and Sweetgreen, this means not only fewer potential customers but also diminished consumer willingness to dine out. Economists warn that monitoring the health of these chains could provide an alternative indicator of regional economic stress, alongside traditional measures like unemployment and stock performance.