Published by Global Banking & Finance Review®
Posted on November 7, 2025
3 min readLast updated: January 21, 2026
Add as preferred source on GoogleAs economic pressures mount, budget-friendly chains like McDonald's and Chili's attract more diners, while fast-casual restaurants struggle to retain younger customers.
By Savyata Mishra
(Reuters) -As U.S. consumers tighten their wallets, budget-friendly restaurant chains such as McDonald's, Chili's and Domino's are emerging as winners, drawing more diners who are trading down to cheaper meals.
The shift is leaving pricier fast-casual chains, including Chipotle Mexican Grill, and Mediterranean-inspired Cava and Sweetgreen, struggling to retain customer visits, particularly among 25- to 35-year-olds.
While quick-service chains such as McDonald's offer low-cost meals with greater focus on fast takeaway and drive-thru options, fast-casual restaurants focus on fresher, high-quality ingredients, and a more relaxed dining atmosphere at slightly higher prices.
Chipotle CEO Scott Boatwright acknowledged on a post-earnings call last week that the sector was "out of favor" and often perceived as overpriced. He added he was working to reframe Chipotle's value proposition after internal studies showed customers don't consider the chain as affordable as other dining options.
Sticky inflation, elevated menu prices and an uncertain economic backdrop are pushing U.S. households in the low- to mid-income tiers to rethink eating out. Younger diners are feeling the pinch from rising youth unemployment, resumed student loan payments and sluggish wage growth.
In the third quarter of 2025, visit frequency declined across all restaurant segments — cheap quick-service chains, more expensive fast-casual outlets and the pricey full-service restaurants — compared to the previous three months, according to data from consulting firm Revenue Management Solutions.
Brinker's flagship brand Chili's is gaining ground with low-income diners even as rivals reported a sharp pullback. On an analyst conference call last week, CEO Kevin Hochman credited the chain's "better than fast food" marketing for driving growth among households earning under $60,000.
Chili's is winning back customers by promoting value-focused items like its Triple Dipper appetizers and $10.99 burger, backed by strong TV and social media campaigns, said Northcoast Research analyst Jim Sanderson.
Burger King, owned by Restaurant Brands, also enjoyed traffic growth in the latest quarter, driven by its value offerings, including the "2 for $5" and "3 for $7" meal deals.
"One of the biggest dividers between the fast-casual and (quick-service) markets is the labor costs are vastly different. That eats away at margins and as some franchises have increased prices to cover those costs ... but that has further pushed low-income diners to the value offered at the drive-thrus," said Brian Mulberry of Zacks Investment Management, an asset management firm.
Domino's CEO Russell Weiner told Reuters last month that the pizza giant's scale allows it to have "sustained value that's profitable, unlike other folks who are probably spending away their balance sheet to keep up," he said.
Rising beef costs, worsened by tariffs, are squeezing margins across the industry. Executives at Chipotle, Restaurant Brands and McDonald's have flagged the spike in beef prices as a key pressure point, given its prominence on their menus.
For the next 12 months, McDonald's price-to-earnings ratio, a common benchmark for valuing stocks, is 22.87, compared to an industry median of 14.37. Cava's ratio is much higher at 81.43.
(Reporting by Savyata Mishra in Bengaluru, additional reporting by Waylon Cunningham in New York; Editing by Alan Barona)
Inflation is the rate at which the general level of prices for goods and services rises, eroding purchasing power.
A quick-service restaurant (QSR) is a type of restaurant that serves fast food and emphasizes speed of service.
Fast-casual restaurants offer higher quality food than fast food but with a more casual dining atmosphere and slightly higher prices.
A value proposition is a statement that explains how a product or service solves a problem or improves a situation for customers.
Budget-friendly options refer to products or services that are affordable and provide good value for money, especially during economic downturns.
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