High Food Prices Are CRASHING RESTAURANT SALES

We've talked a lot on this channel in the past year or so about just how much fast food chains like McDonald's have been struggling to get their customers back since prices have shot up tremendously. But the truth is, it's not just McDonald's. The entire restaurant industry is wobbling right now due to the increase in food prices, labor prices, as well as inflation. And whether we like to admit it or not, around 35% of Americans eat out at chain restaurants at least twice a week. That's a lot. But here's the problem. Inflation at restaurants has been going up roughly double what inflation has been just at the grocery store. So if you are somebody who regularly visits restaurants, you probably aren't visiting them as much anymore. And I have heard from many of you in the comment section below about just that. People have said they've cut back tremendously on going out. Many people say they just don't eat out at all anymore due to the increased cost and the cost of living in general. And to give you a perspective here, from 2019 to 2025, menu prices have increased by 30 to 80% depending on the restaurant and the items that you order. That is insane. We've talked so much about McDonald's and the problems they're having. Well, take a look. McDonald's has seen their prices spike by about 40% on average since 2019. And I did a breakdown video a while ago, probably like a year ago, showing that some of their items since then have gone up over 200%. So that's just an average across the board, but some of the items have gone up tremendously. At IHOP, prices have gone up about 80% in the same time period. Chipotle, they've increased their prices about 70% in the past five years. And in fact, Chipotle's CEO just last week sounded an alarm on the economy about how much their business has been going down over the past several quarters because their younger demographic that typically goes to Chipotle hasn't been coming in. They don't have the income, especially disposable income. And that's why their stock price crashed 21% in just a week. I guarantee you guys, if the S&P 500 or the Dow or NASDAQ crashed by 20% or more in just one week, everybody would be in all-out panic mode. People would say, the stock market is crashing. But when it just happens to one individual company, especially if it's one you don't care about, people just say, whatever, shrug your shoulders and move on. And I don't really care what happens either way. I don't have a vested interest in Chipotle, but the reason I bring this up is to show you where things are with this economy right now. Wingstop is another restaurant that has been hit hard. Their stock price dived 26% over the past year and almost 14% just in October alone. Shake Shack, which is a very popular burger chain that's still not a franchise. It's still 100% corporate owned. Their stock price is down over 20% from one year ago. And not that long ago, Shake Shack was kind of bragging about how they were still doing pretty well compared to McDonald's and these other fast food restaurants, despite their food being more expensive. But it looks like that victory lap is coming to an end. And now fast forward to 2025, at least 15 major food chains have filed for bankruptcy, and there's been a 50% surge in restaurant bankruptcies, including independent restaurants, from just 2024 to 2025. In fact, restaurants accounted for about 12% of all bankruptcies in 2025. Some of the biggest revenue losers over the past year have been KFC, with $250 million in losses. Chipotle at $150 million in losses. Popeyes with $91 million in losses. TGA Fridays has $100 million in losses. Hooters has $80 million in losses. Denny's has lost $40 million. Papa John's has lost $30 million. And Subway and Hardee's have lost $10 and $15 million, respectively. And it's just so annoying when people say, oh, I went to a restaurant yesterday and you couldn't even get a table. It was so packed. I had to wait for two hours and the place was just hopping. That's always going to happen, regardless of how bad things get. Because certain restaurants are always going to be worth the price. The value is there. The food is fantastic. And once that gets around and people who can afford it know about it, it's going to be perpetually busy, no matter what's going on. Because there's always going to be people that can afford to go out and spend that extra couple of hundred dollars on dinner. You can see the fog starting to roll in through the Golden Gate. That's pretty cool. But as you can see by the restaurants that I just listed off, these are not fancy places. KFC, Chipotle, TGI Fridays, Hooters, Denny's, etc. These are yet again, restaurants that cater to the middle and lower income consumer, just like McDonald's. And these are the businesses that are suffering. Burger King is another one that has been hurt big time in the last five years. They're closing around 377 stores nationwide. Denny's is closing 90 stores. TGI Fridays closing 100. In fact, it used to be one in South Beach. They closed it like two years ago already. Jack in the Box, they're closing 120 restaurants. Applebee's is closing 30. Hardee's is closing 145. Wendy's is closing 72. And Popeye's is closing up to 30 locations. And they say there's up to 20,000 job losses expected from these restaurant closures in 2025. But I would estimate it's probably a lot higher. These are a lot of restaurants closing down. And really the reason behind all of this is inflation. Something we talk about a lot here on the channel. And with what the Fed is doing right now, it seems like they have no desire to actually fix the inflation problems in this country. They had sort of this pretend fight on inflation ever since 2022 when they started hiking interest rates. They never hiked them high enough to actually squash inflation. It has been consistently going up over the past several reports. And here they are cutting rates. And since we know that inflation doesn't seem to be a top priority for the Fed or our government, well, that means you as a consumer and somebody who needs to buy things needs to plan accordingly. This is why I'm telling people all the time, you need to find a second source of income. You need to find a way to increase your income in some way, shape or form that makes the most sense for you. You know, if you just increase your income by only 20% a month, let's say you make $5,000 a month or your household does, and you can increase that to an extra $1,000 a month. Imagine how much of an extra buffer that will give you if you can save all that money and reduce expenses at the same time. And like we talked about in the SNAP benefit video, these increases in food prices and basically everything else are permanent. Don't expect these prices to come down. You know, the Fed's goal, remember their target rate of inflation is 2% per year. Well, right now we're sitting at over 3% with the official numbers and they don't seem to care. And of course the food prices are up much more than that. But the point that I'm making here is that these prices are not going to come down because even when things are good and working properly, the Fed is still targeting at least a 2% price increase on everything year over year. So their goal is to never make things go down. That would be deflation. And they say that's bad for the economy. One of my viewers asked me to talk about that and I will in a future video, but not today. Instead, let's move on to the job market because this is a situation that continues to worsen pretty quickly. You know, once or twice a month, I have been making update videos on what's going on with the job market and the situation is not getting any better. And what I mean by the job market continuing to get worse, well, it just seemed like a month or two ago, there was about 800,000 job losses so far counted in the U.S. economy year to date. Well, now that number has surpassed 1.1 million guys. So an extra 300,000 people have lost jobs just in the last six weeks or so. That is the largest reading since the pandemic. And it's on par now with what we saw during the GFC in 2008 and 2009. When are people going to wake up and realize the game is over? There are still people out there talking about how good the economy is. This is the best economy we've ever had. The job market's stronger than ever. All this rah-rah crap that is just false at this point. I even see so many headlines or stories that talk about how layoffs are low and hirings are low. So they're not really firing anybody, but they're not hiring anybody either. That's baloney. Clearly by these numbers, over a million people losing jobs so far this year and counting. Some of the biggest ones that were just announced recently were with UPS and with Amazon and Target. The CEO of Challenger Gray and Christmas also just said that this is a huge shift in the direction of things right now. And it's something we all need to take a look at. And just look at this chart right here that shows you how many jobs were lost in any given year, going back to even before the year 2000. What do you notice? Obviously this is the highest amount since the pandemic, which doesn't really count because if you think about what went down then, you can't compare it to now. But when you exclude that, it hasn't been this bad since going back to 2008. And before that, it wasn't this bad since going back to 2001 or so. This is really bad. The most recent layoffs have been concentrated in jobs like technology, retail, service, and warehousing jobs. And I'm surprised about the retail one because retail, hospitality, and the medical field have been some of the strongest job creators over the past year. Employers announced 153,000 job cuts just last month in October, which is a 183% increase from the month before, marking the worst October for layoffs since 2003, even predating the GFC. This whole notion that we had labor hoarding, companies hanging on to people that they hired during the pandemic because it was so difficult to get people and they figured they'll just take the loss on keeping them employed. Well, that's kind of over now as we see with this massive amount of job loss that's been happening. These companies have realized if they want to remain profitable or if they want to see their profits or share prices go up, they have no choice but to get rid of people now. But everybody just talks about the unemployment rate. Well, the unemployment rate is still at 4.3%, which is relatively low, so we shouldn't worry about it. Okay, whatever you say. We should just rely on all those government figures and not even give it a second thought or use our brains to try to interpret what's going on. That's not necessary. Even though we had the most amount of layoffs happening since 2003, eh, who cares? Since we're not getting any of the government jobs numbers either, the ADP payroll just came out this week and showed that private companies have added 42,000 jobs in October, which is not bad considering we had two months that were negative. So really, they're just kind of catching up and creating the jobs that were actually lost, which is kind of a net zero. When you look at the amount of jobs created versus loss, in essence, there were no jobs created over the past few months, not even in the private sector. I almost forgot to tell you guys, I'm walking on South Ridge West and East here in Tiburon today. So because the job market is so bad right now, this is the excuse that the Fed is using to cut interest rates. They say they're shifting their focus away from inflation and are more worried about the job market because of all the new developments taking place right now and just how many jobs are being lost. And it is a legitimate concern, but so is inflation, right? Who cares if you have a job if you can't afford to buy anything with the money you make? So it is this real impossible situation that they've created for themselves. A quote from Jerome Powell at the latest meeting, he said, you see a significant number of companies either announcing that they are not going to be doing much hiring or actually doing layoffs. We're watching that very carefully. Yeah, I'm sure you are. And number two reasons that employers are announcing layoffs right now is they say, number one is cost cutting. And number two is artificial intelligence as the top two reasons in October. I'd be willing to bet that most of it is cost cutting. AI is a small part of it, depending on the type of work. But like these restaurants, for example, that are all shutting down and 20,000 people are losing jobs. That's not due to AI. That's due to people not patronizing these businesses anymore and spending the money. The tech layoffs also continue to get worse. There have been over 141,000 tech layoffs in 2025. And that is a 17% increase from just one year ago. One guy in the tech sector recently lost his job in September. He says he has applied to a lot of different jobs, like so many other people, hasn't found much. And then he finally got an interview. And guess what? The interview was with an AI bot that lasted 12 minutes. These companies are being so cheap that they are now offloading the hiring process to AI. I mean, that's kind of pathetic, guys. How can you trust a robot to tell you if a person is qualified for anything? I've experimented with chat GPT, and you can punch in some kind of prompt and tell it to do something. And then it just gives you the runaround about this, that, or the other thing, and doesn't do anything that you tell it to do. And that's supposed to be one of the good ones. So imagine what some of these AI programs that are being used to interview people are spitting out on the other end. Personally, I think it's kind of insulting for these companies to even be using AI bots to interview people. It doesn't even really give them a fair chance. Another layoff announcement that just happened this week was IBM. They just announced that they're going to be laying off, this is a quote, a low single digit percentage of its total workforce. Well, what does that mean? Well, we can run some quick numbers and find out what it probably means. IBM has 270,000 people working for them at the end of 2024. So let's say it's only 3%. That's a very conservative estimate of what they might lay off. Well, that's over 8,100 people, guys. Another one of the largest layoff announcements of 2025. And this is all happening by the end of the year. So the year's almost over in case you don't notice. So these people are all going to be out of work in a couple of months. And the day you're watching this video, well, if you watch it on the day it came out on Friday this week, this is a big disappointing Friday because this is now the second month in a row that we are not getting the official jobs numbers from the government. And a lot of economists are starting to get worried about this. And of course, it's all due to the government shutdown happening. Now, my first reaction to this is, well, I don't know why it's such a worry, because these jobs numbers are always fake anyways. Even Jerome Powell admitted that the job numbers always come out strong and then usually get revised down later. So regardless of what the number actually is, it's not a real reflection of what's going on. But of course, economists use it to try and guess what's going on. But I think none of us really have to guess because with all these major layoff announcements, UPS laying off over 40,000 people so far this year, Amazon potentially 30,000 more pretty soon, IBM just announced 8,100 probably, General Motors is getting rid of 5,500. It's almost like it doesn't even mean anything anymore. These numbers seem kind of meaningless, just like billions and trillions, numbers that are too large to fathom most of the time. All these layoff notices are becoming so rampant that it just seems kind of normal. But the economists, I guess, are worried about whether this is just typical cost cutting or a warning sign of something structurally breaking and the job market. Well, I think it's a little bit of both. Not that my opinion really matters, but that's what I think, because some of these companies admit they're just doing it to cut costs and increase their bottom line. That's something that's gone on since the beginning of time. And those companies that are replacing people with AI are probably the ones that fit into that category. But the restaurant layoffs is a different story. Like we talked about in the beginning, those people losing their jobs is a systemic failure that's happening right before our eyes. Those jobs are not being lost because businesses are cutting costs. Those jobs are being lost because they are losing their customers that normally would go there that can no longer afford to. That's a major distinction I want people to understand. And also, we don't have to guess that much either, because between the reports that come out from Challenger, Gray, and Christmas, they track all the layoffs that have been going on and the ADP numbers. We can still get a pretty healthy picture of what's going on in the economy. And oftentimes, those numbers are far more reflective and accurate of what's happening in the economy than what we hear from the BLS. You might as well just remove the L, and those are the numbers that we get. The reality is when these BLS numbers come out, we're all getting munsoned over here. Let's see if we can pick up that reference. Ramsey, I know you know what it means. A couple of other things that are happening in the job market is the job openings fell in October to their lowest level since September of 2021. And they say over 300,000 government jobs have been cut this year, which is a large chunk of that 1.1 million. And now with the government shutdown, those numbers could explode much higher if those jobs aren't brought back when the shutdown is over. Even with all this going on, a lot of the economists can agree that the labor market is weakening, but they're saying it hasn't completely fallen apart. I wonder what actually has to happen in their opinion for them to say, oh yeah, it's completely falling apart. What level do things need to reach for them to say it's completely falling apart? Because historically speaking, it hasn't fallen apart this badly in over 20 years. So how bad does it have to get for it to be falling apart? And all these experts who are just sitting around twiddling their thumbs waiting for the government shutdown to be over so they can get the official BLS numbers, that's going to shape their opinion of what's going on in the economy. These guys are jokers, man. A lot of people pick on me like, hey, what does this guy know? Walking around the neighborhood on YouTube, didn't even go to college, whatever. That's all true. I never went to college. I'm just an ordinary guy. But one thing that I have that seems to be missing in the world today is common sense. And I see things for what they are. And what I see right now is nothing but lies and sugar coating to make things look good when they're not. And one last thing I want to leave you guys with in this video is one of my viewers wrote me their own personal layoff story. Wish to remain anonymous, but this is a great lesson for everybody to hear in case something like this happens to you. He says, after 25 years with a well-known company, he was laid off in April due to outsourcing, and he even had to train his overseas replacement. That's humiliating. And despite receiving a severance package, he was financially unprepared for this job loss, and he was carrying over $10,000 in credit card debt, a mortgage, and had no savings. Kind of like the typical avatar I talk about on this channel of people that are just living on the edge financially and cannot handle any sort of emergency like this. He said to make matters worse, soon after that happened, his relationship ended, leaving him unemployed, single, and struggling emotionally. And he had to use his severance pay to pay off debt and stay afloat, but couldn't find work despite applying for about 60 jobs. And the prolonged unemployment inevitably led him into a deep depression, and eventually a family member helped him find an entry-level position that pays about half of his previous salary. He wanted to write me this and tell me that he gained a lot of hard lessons throughout this journey about financial preparedness, humility, and gratitude. And now he's managing his finances carefully and is determined to never repeat the mistakes that left him this vulnerable ever again. Kind of like what I try to teach people on this channel day in and day out. And he also wanted to just acknowledge that he is extremely fortunate to have recovered from this situation, knowing that many other people that could go through something like this are not quite as lucky and don't end up recovering. Those are people that turn to drugs or end up homeless or worse. And that's why I cover stuff like this on the channel, because I don't want people to end up in a worse situation. This is already really bad what happened to this guy, but at least he was able to pull himself out of it and things are starting to look up. But it could easily continue the spiral downward, and you can use your imagination of where things could go from here. And I just don't want that to happen to people who watch this channel. I care about everybody who watches, and I want everybody to succeed in their own way. So let me know in the comments what you're going to be doing to improve your situation just by a little bit. And if you enjoyed this video, make sure you subscribe to the channel. And if you don't want to wait for my next video to come out, check out this one on the screen right over here, and I'll see you in the next one.