Gen Z is under financial pressure. Fast-casual chains are bearing the brunt.

Gen Z is under financial pressure, and fast-casual chains that thrive with younger consumers are starting to notice.

"We've seen the macroeconomic headwinds really impact that 25-to-35-year-old guest segment, where last year ... they had a lot of tailwinds," Cava (CAVA) CEO Brett Schulman told Yahoo Finance. "Their frequency to existing restaurants has moderated as they felt cost pressures from around them."

Same-store sales growth slowed for the Mediterranean chain in its most recent quarter, rising 1.9% year over year after an 18.1% increase in the same period a year ago. Cava stock fell over 7% on the news.

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Pressures on America's youngest consumers include unemployment, which is disproportionately affecting younger Americans. In August, unemployment among Americans ages 20 to 24 stood at 9.2%, up from 7.9% a year ago, while the overall rate was 4.3%.

Plus, student loan collections returned in April for the first time since March 2020, and the second-highest amount of student loan debt is held by the 25-to-34-year-old demographic.

In the third quarter, the Federal Reserve Bank of New York found that student loan debt is up $47 billion from a year ago, while credit card debt is up $67 billion and mortgage debt is up $478 billion.

Read more: 6 Gen Z savings strategies that can work for anyone

Other factors include slower wage growth and higher rent. Per JPMorgan Chase, workers ages 25 to 29 have seen the sharpest slowdown in income gains, while Bank of America found that the "homeownership rate for those under 35 years old is significantly lower than for those who are older."

For those renting, rent inflation was 3.5%, according to the latest CPI report published last month.

Chipotle (CMG) CEO Scott Boatwright was the first CEO to sound the alarm Oct. 30 in a call with investors. He said it is "over-indexed" to a "particularly challenged cohort ... [the] 25-to-35-year-old ... This group is facing several headwinds, including unemployment, increased due loan repayment, and slower real wage growth." Chipotle stock is down over 50% this year.

Sweetgreen (SG) this past week posted same-store sales that declined a staggering 9.5% from a year ago, compared to a 5.6% gain last year.

On a call with investors, co-founder and CEO Jonathan Neman said performance was impacted by "softer sales trends" in the Northeast and Los Angeles markets, which was "coupled with lighter spending among younger guests, particularly the 25-to-35-year-old age group where we over-indexed." Sweetgreen stock is off 80% in 2025.

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A Sweetgreen restaurant in Chicago. Sweetgreen stock dropped more than 20% on Nov. 7 after the salad chain again cut its 2025 outlook. (Scott Olson/Getty Images)·Scott Olson via Getty Images

In a note to clients in early October, Charles Schwab said its recent survey data indicates fast-casual concepts over-index to young consumers, particularly 18-to-24-year-olds.

It found that Cava and Sweetgreen had the most exposure, at 19% and 18%, respectively, with others like Dutch Bros (BROS), Wingstop (WING), Shake Shack (SHAK), Papa John's (PZZA), Jack in the Box (JACK), and Chipotle among the chains with the highest exposure to younger consumers.

Not every chain, of course, is seeing the same challenges among younger consumers.

Shake Shack (SHAK) saw same-store sales growth rise 4.9% in its latest quarter, slightly higher than the 4.4% posted this time last year.

CEO Rob Lynch told investors on an earnings call that while he's seen "commentary about the unemployment rates of younger populations ... which obviously impacts our industry," it has "taken those challenges and incorporated them into our strategy."

Coffee chains like Dutch Bros and Starbucks (SBUX) were quick to negate the trend as well.

Dutch Bros CEO Christine Barone told investors the company is seeing "really incredible performance out of those younger cohorts."

"What we're seeing out of Gen Z ... is really encouraging," Barone added. Its same-store sales grew 5.7% in the quarter.

Starbucks saw its US same-store sales come in flat, but CEO Brian Niccol was quick to bat back the idea that its trends were lagging among younger consumers.

"We look at every kind of generational cohort, we have seen a really nice response, both in transactions and sales over this most recent quarter," Niccol told investors on Oct. 29.

That same day, at the same time, Chipotle was telling investors that its low-income, younger consumers were hurting business. Niccol joined Starbucks from Chipotle in September 2024.

Brooke DiPalma is a reporter for Yahoo Finance. Follow her on X at @BrookeDiPalma or email her at [email protected].

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