In the absence of fresh economic data amid the ongoing government shutdown, investors and analysts are turning to an unlikely barometer of consumer strength — Chipotle Mexican Grill (CMG).

The restaurant chain’s soft third-quarter results and CEO Scott Boatwright’s warning about waning sales among younger and lower-income diners have prompted speculation that the U.S. economy could be losing steam. But a closer look suggests the so-called “Chipotle indicator” may be less about a broad economic contraction and more about a brand grappling with its own limits in a competitive, price-sensitive environment.

A Shrinking Appetite Among Young Consumers

On last week’s earnings call, Boatwright described a notable pullback among customers earning under $100,000, who make up roughly 40% of Chipotle’s total sales. The trend was most pronounced among diners aged 25 to 35, a cohort squeezed by student loan repayments, weaker real wage growth, and rising costs of living.

“Earlier this year, as consumer sentiment declined sharply, we saw a broad-based pullback in frequency across all income cohorts,” Boatwright said. “Since then, the gap has widened, with low- to middle-income guests further reducing frequency.”

That statement immediately fueled recession chatter. The logic goes like this: if young professionals are cutting back on fast-casual meals — a relatively affordable luxury — it could signal broader strain on discretionary spending.

Yet, as some analysts note, the weakness may not represent a macro downturn so much as micro missteps. “Chipotle is seeing fatigue at the lower end, but that doesn’t necessarily mean consumers as a whole are retrenching,” said Victoria Fernandez, chief market strategist at Crossmark Global Investments. “You’re not seeing the kind of menu innovation or experiential refresh that keeps people coming back. It’s not that people aren’t eating out — they’re just not eating out there.”

A Tale of Two Consumers

Other major consumer companies paint a much brighter picture.

American Express (AXP) reported a “bang-up” third quarter, with CEO Stephen Squeri highlighting robust spending among millennials and affluent households. Demand for premium credit cards has surged despite Amex raising its Platinum Card annual fee to $895 from $695, suggesting high-end consumers remain insulated from economic headwinds.

Similarly, Starbucks (SBUX) reported a rebound in U.S. sales, driven in part by younger demographics and strong campus activity, while Hasbro (HAS) saw digital gaming revenue soar 42%, led by its “Magic: The Gathering” franchise. These results suggest selective consumer strength, particularly in categories that combine digital engagement, convenience, or brand innovation.

That divergence supports Federal Reserve Chair Jerome Powell’s recent comments that spending remains “uneven,” with higher-income households driving most of the gains.

Chipotle’s Own Challenges

Even loyal customers acknowledge that Chipotle’s pricing strategy and operations have alienated some diners. Online feedback to the company’s earnings news was “massive,” according to market commentators, with complaints centering on rising prices, shrinking portions, and inconsistent customer service.

“Chipotle’s problem isn’t that the economy is failing — it’s that Chipotle is failing to adapt,” one analyst said. “Price increases have outpaced perceived value. You can charge $13 for a burrito, but it better be flawless every time.”

Meanwhile, competitors such as Sweetgreen, Cava, and Qdoba have expanded aggressively into suburban and college-town markets, eating into Chipotle’s core millennial base. Fernandez noted that unlike Starbucks, which launched a $1 billion “Back to Starbucks” turnaround initiative to revitalize stores and menu innovation, “Chipotle isn’t showing the same reinvention energy.”

Reading the Burrito Barometer

The “Chipotle indicator” may tell us something about shifting consumer sentiment — particularly the anxiety of younger, debt-laden Americans — but it’s far from a definitive recession signal. Broader spending trends, strong credit usage, and continued corporate earnings growth point instead to a bifurcated but still expanding economy.

As the holiday season approaches, the real test will be whether middle-income consumers continue to trade down, or whether the weakness at Chipotle proves to be, quite literally, a case of lost flavor rather than lost confidence.