Coastal Cities Feel the Pinch of Trump's Policies as Restaurant Chains Struggle

The recent underwhelming earnings results reported by key casual food businesses like Shake Shack, Sweetgreen, and Cava are warning signs for the U.S. economy, particularly for businesses based in metropolitan centers along the country's coasts. As President Trump's aggressive policies on international trade and immigration take hold, these businesses are facing declining sales and revenue, mainly due to reduced consumer spending in these areas. Coastal cities, which are hubs for immigration and international tourism, are bearing the brunt of the economic downturn.

Key Takeaways:

• Shake Shack's 80 U.S. locations in New York account for 13% of its 610 domestic restaurants, while Sweetgreen has one-third of its branches in New York and California, and Cava has 17% of its business in the D.C. metropolitan area.
• The three largest coastal cities, New York, Los Angeles, and San Francisco, suffered a combined 43,000 job losses in the first six months of the year, while the U.S. added 500,000 jobs over the same period.
• New York City Tourism + Conventions expects a 17% fall in international visitors this year, and Visit California forecasts a 9.2% fall in arrivals due to travelers registering their disapproval of Trump's administration by vacationing elsewhere.
• A preliminary study by the University of Michigan found left-leaning voters are much less likely to spend freely in August than their Republican counterparts, contributing to reduced consumer spending.
• Businesses dependent on coastal cities are facing a smaller pool of potential customers, with those who remain appearing less likely to spend their disposable income.
• Other surprisingly telling indicators of an economic downturn or coming recession might include declining sales of men's underwear, reduced sales of inessential goods like snacks and cigarettes, or a rise in the sales of miniature bottles of alcohol.

Statistics:

• Shake Shack shares dropped 7.7% in response to its second-quarter results.
• Sweetgreen shares fell 23% after cutting its 2025 outlook for the second consecutive quarter.
• Cava's quarterly revenue disappointed estimates due to weaker-than-expected sales growth.
• The combined workforce reduction in New York, Los Angeles, San Francisco, and Washington, D.C. was 60,000 people over the first six months of the year.
• New York City Tourism + Conventions expects a 17% fall in international visitors this year.

Sources:

• Bloomberg columnist Connor Sen
• Bloomberg (Shake Shack, Sweetgreen, and Cava business locations and sales data)
• University of Michigan preliminary study on consumer sentiment
• New York City Tourism + Conventions and Visit California tourism forecasts