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Tag: Chipotle Mexican Grill Inc

  • Long-predicted consumer pullback finally hits restaurants like Starbucks, KFC and McDonald’s

    Long-predicted consumer pullback finally hits restaurants like Starbucks, KFC and McDonald’s

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    It’s finally here: the long-predicted consumer pullback.

    Starbucks announced a surprise drop in same-store sales for its latest quarter, sending its shares down 17% on Wednesday. Pizza Hut and KFC also reported shrinking same-store sales. And even stalwart McDonald’s said it has adopted a “street-fighting mentality” to compete for value-minded diners.

    For months, economists have been predicting that consumers would cut back on their spending in response to higher prices and interest rates. But it’s taken a while for fast-food chains to see their sales actually shrink, despite several quarters of warnings to investors that low-income consumers were weakening and other diners were trading down from pricier options.

    Many restaurant companies also offered other reasons for their weak results this quarter. Starbucks said bad weather dragged its same-store sales lower. Yum Brands, the parent company of Pizza Hut, KFC and Taco Bell, blamed January’s snowstorms and tough comparisons to a strong first quarter last year for its brands’ poor performance.

    But those excuses don’t fully explain the weak quarterly results. Instead, it looks like the competition for a smaller pool of customers has grown fiercer as the diners still looking to buy a burger or cold brew become pickier with their cash.

    The cost of eating out at quick-service restaurants has climbed faster than that of eating at home. Prices for limited-service restaurants rose 5% in March compared with the year-ago period, while prices for groceries have been increasing more slowly, according to the Bureau of Labor Statistics.

    “Clearly everybody’s fighting for fewer consumers or consumers that are certainly visiting less frequently, and we’ve got to make sure we’ve got that street-fighting mentality to win, irregardless of the context around us,” McDonald’s CFO Ian Borden said on the company’s conference call on Tuesday.

    Outliers show that customers will still order their favorite foods, even if they’re more expensive than they were a year ago. Wingstop, Wall Street’s favorite restaurant chain, reported its U.S. same-store sales soared 21.6% in the first quarter. Chipotle Mexican Grill, whose customer base is predominantly higher income, saw traffic rise 5.4% in its first quarter. And Restaurant Brands International’s Popeyes reported same-store sales growth of 5.7%.

    “What we’ve seen with the consumer is, if they are feeling pressure, they have a tendency to pull back on more high-frequency [quick-service restaurant] occasions,” Wingstop CEO Michael Skipworth told CNBC.

    He added that the average Wingstop customer visits just once a month, using the chain’s chicken sandwich and wings as an opportunity to treat themselves rather than a routine that can easily be cut due to budget concerns. Skipworth also said that Wingstop’s low-income consumers are actually returning more frequently these days.

    Even so, many companies in the restaurant sector and beyond it have warned consumer pressures could persist. McDonald’s CEO Chris Kempczinski told analysts the spending caution extends worldwide.

    “It’s worth noting that in [the first quarter], industry traffic was flat to declining in the U.S., Australia, Canada, Germany, Japan and the U.K.,” he said.

    Two of the chains that struggled in the first quarter cited value as a factor. Starbucks CEO Laxman Narasimhan said occasional customers weren’t buying the chain’s coffee because they wanted more variety and value.

    “In this environment, many customers have been more exacting about where and how they choose to spend their money, particularly with stimulus savings mostly spent,” Narasimhan said on the company’s Tuesday call.

    Yum CEO David Gibbs noted that rivals’ value deals for chicken menu items hurt KFC’s U.S. sales. But he said the shift to value should benefit Taco Bell, which accounts for three-quarters of Yum’s domestic operating profit.

    “We know from the industry data that value is more important and that others are struggling with value, and Taco Bell is a value leader. You’re seeing some low-income consumers fall off in the industry. We’re not seeing that at Taco Bell,” he said on Wednesday.

    It’s unclear how long it will take fast-food chains’ sales to bounce back, although executives provided optimistic timelines and plans to get sales back on track. For example, Yum said its first quarter will be the weakest of the year.

    For its part, McDonald’s plans to create a nationwide value menu that will appeal to thrifty customers. But the burger giant could face pushback from its franchisees, who have become more outspoken in recent years. While deals drive sales, they pressure operators’ profits, particularly in markets where it is already expensive to operate.

    Still, losing ground to the competition could motivate McDonald’s franchisees. This marks the second consecutive quarter that Burger King reported stronger U.S. same-store sales growth than McDonald’s. The Restaurant Brands chain has been in turnaround mode over the last two years and spending heavily on advertising.

    Starbucks is also betting on deals. The coffee chain is gearing up to release an upgrade of its app that allows all customers — not just loyalty members – to order, pay and get discounts. Narasimhan also touted the success of its new lavender drink line that launched in March, although business was still sluggish in April.

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  • Companies — profitable or not — make 2024 the year of cost cuts

    Companies — profitable or not — make 2024 the year of cost cuts

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    Mathisworks | Digitalvision Vectors | Getty Images

    Corporate America has a message for Wall Street: It’s serious about cutting costs this year.

    From toy and cosmetics makers to office software sellers, executives across sectors have announced layoffs and other plans to slash expenses — even at some companies that are turning a profit. Barbie maker Mattel, PayPal, Cisco, Nike, Estée Lauder and Levi Strauss are just a few of the firms that have cut jobs in recent weeks.

    Department store retailer Macy’s said it will close five of its namesake department stores and cut more than 2,300 jobs. JetBlue Airways and Spirit Airlines have offered staff buyouts, while United Airlines cut first-class meals on some of its shortest flights.

    As consumers watch their wallets, companies have felt pressure from investors to do the same. Executives have sought to show shareholders that they’re adjusting to consumer demand as it returns to typical patterns or even softens, as well as aggressively countering higher expenses.

    Airlines, automakers, media companies and package giant UPS are all digesting new labor contracts that gave raises to tens of thousands of workers and drove costs higher.

    Companies in years past could get away with passing on higher costs to customers who were willing to splurge on everything from new appliances to beach vacations. But businesses’ pricing power has waned, so executives are looking for other ways to manage the budget — or squeeze out more profits, said Gregory Daco, chief economist for EY.

    “You are in an environment where cost fatigue is very much part of the equation for consumers and business leaders,” Daco said. “The cost of most everything is much higher than it was before the pandemic, whether it’s goods, inputs, equipment, labor, even interest rates.”

    There are some exceptions to the recent cost-cutting wave: Walmart, for example, said last month that it would build or convert more than 150 stores over the next five years, along with a more than $9 billion investment to modernize many of its current stores.

    And some companies, such as banks, already made deep cuts. Five of the largest banks, including Wells Fargo and Goldman Sachs, together eliminated more than 20,000 jobs in 2023. Now, they’re awaiting interest rate cuts by the Federal Reserve that would free up cash for pent-up mergers and acquisitions.

    But cost reductions unveiled in even just the first few weeks of the year amount to tens of thousands of jobs and billions of dollars. In January, U.S. companies announced 82,307 job cuts, more than double the number in December, while still down 20% from a year ago, according to Challenger, Gray and Christmas.

    And the tightening of months prior is already showing up in financial reports.

    So far this earnings season, results have indicated that companies have focused on driving profits higher without the tailwind of big price increases and sales growth.

    As of mid-February, more than three-quarters of the S&P 500 had reported fourth-quarter results, with far more earnings beats than revenue beats. The quarter’s earnings, measured by a composite of S&P 500 companies, are on pace to rise nearly 10%. Revenues, however, are up a more modest 3.4%.

    Layoffs, flight cuts and store closures

    While companies’ drive for higher profits isn’t new, they have made bolstering the bottom line a priority this year.

    Downsizing has rippled across the tech industry, as companies followed the lead of Meta’s 2023 cuts, which many analysts credited with helping the social media giant rebound from a rough 2022. CEO Mark Zuckerberg had dubbed 2023 the “year of efficiency” for the parent of Facebook and Instagram, as it slashed the size of its workforce and vowed to carry forward its leaner approach.

    In recent weeks, Amazon, Alphabet, Microsoft and Cisco, among others, have announced staffing reductions.

    And the layoffs haven’t been contained to tech. UPS said it was axing 12,000 jobs, saving the company $1 billion, CEO Carol Tome said late last month, citing softer demand. Many of the largest retail, media and entertainment companies have also announced workforce reductions, in addition to other cuts.

    Warner Bros. Discovery has slashed content spending and headcount as part of $4 billion in total cost savings from the merger of Discovery and WarnerMedia. Disney initially promised $5.5 billion in cost reductions in 2023, fueled by 7,000 layoffs. The company has since increased its savings promise to $7.5 billion, and executives suggested in its Feb. 7 quarterly earnings report that it may exceed that target.

    Last week, Paramount Global announced hundreds of layoffs in an effort to “operate as a leaner company and spend less,” according to CEO Bob Bakish. Comcast’s NBCUniversal, the parent company of CNBC, has also recently eliminated jobs.

    JetBlue Airways, which hasn’t posted an annual profit since before the pandemic, is deferring about $2.5 billion in capital expenditures on new Airbus planes to the end of the decade, culling unprofitable routes and redeploying aircraft in addition to the worker buyouts.

    Delta Air Lines, which is profitable, in November said it was cutting some office jobs, calling it a “small adjustment.”

    Some cuts are even making their way to the front of the cabin. United Airlines, which also posted a profit in 2023, at the start of this year said it would serve first-class meals only on flights more than 900 miles, up from 800 miles previously. “On flights that are 301 to 900 miles, United First customers can expect an offering from the premium snack basket,” according to an internal post.

    Several of the country’s largest automakers, such as General Motors and Ford Motor, have lowered spending by billions of dollars through reduced or delayed investments on all-electric vehicles. The U.S.-based companies as well as others, such as Netherlands-based Stellantis, have recently reduced headcount and payroll through voluntary buyouts or layoffs.

    Even Chipotle, which reported more foot traffic and sales at its restaurants in the most recently reported quarter, is chasing higher productivity by testing an avocado-scooping robot called the Autocado that shortens the time it takes to make guacamole. It’s also testing another robot that can put together burrito bowls and salads. The robots, if expanded to other stores, could help cut costs by minimizing food waste or reducing the number of workers needed for those tasks.

    Shifting patterns

    Industry experts have chalked up some recent cuts to companies catching their breath — and taking a hard look at how they operate — after an unusual four-year stretch caused by the pandemic and its fallout.

    EY’s Daco said the past few years have been marked by a mismatch in supply and demand when it comes to goods, services and even workers.

    Customers went on shopping sprees, fueled by government stimulus and less experience-related spending. Airlines saw demand disappear and then skyrocket. Companies furloughed workers in the early pandemic and then struggled to fill jobs.

    He said he expects companies this year to “search for an equilibrium.”

    “You’re seeing a rebalancing happening in the labor markets, in the capital markets,” he said. “And that rebalancing is still going to play out and gradually lead to a more sustainable environment of lower inflation and lower interest rates, and perhaps a little bit slower growth.”

    The auto industry, for example, faced a supply issue during much of the Covid pandemic but is now facing a potential demand problem. Inventories of new vehicles are rising — surpassing 2.5 million units and 71 days’ supply toward the end of 2023, up 57% year over year, according to Cox Automotive — forcing automakers to extend more discounts in an effort to move cars and trucks off dealer lots.

    Automakers have also been contending with slower-than-expected adoption of EVs.

    David Silverman, a retail analyst at Fitch Ratings, said companies are “feeling a bit heavy as sales growth moderates and maybe even declines.”

    Cost cuts at UPS, Hasbro and Levi all followed sales declines in the most recent fiscal quarter. Macy’s, which reports earnings later this month, has said it expects same-store sales to drop, and there’s early evidence that may come to bear: Consumers pulled back on spending in January, with retail sales falling 0.8%, more than economists expected, according to the latest federal data.

    Most major retailers, including Walmart, Target and Home Depot, will report earnings in the coming weeks.

    Credit ratings agency Fitch said it doesn’t expect the U.S. economy to tip into recession, but it does anticipate a continued pullback in discretionary spending.

    “Part of companies’ decision to lower their expense structure is in line with their views that 2024 may not be a fantastic year from a top-line-growth standpoint,” Silverman said.

    Plus, he added, companies have had to find cash to fund investments in newer technology such as infrastructure that supports e-commerce, a resilient supply chain or investments in artificial intelligence.

    Forward momentum

    Companies may have another reason to cut costs now, too. As they see other companies shrinking the size of their workforces or budgets, there’s safety in numbers.

    Or as Silverman noted, “layoffs beget layoffs.”

    “As companies have started to announce them it becomes normalized,” he said. “There’s less of a stigma.”

    Even with rolling layoffs, the labor market remains strong, which may help explain why Wall Street has by and large rewarded those companies that have found areas to save and returned profits to shareholders.

    Shares of Meta, for example, almost tripled in price in 2023 in that “year of efficiency,” making the stock the second-best gainer in the S&P 500, behind only Nvidia. After laying off more than 20,000 workers in 2023, Meta on Feb. 2 announced its first-ever dividend and said it expanded its share buyback authorization by $50 billion.

    UPS, fresh from job cuts, said it would raise its quarterly dividend by a penny.

    Overall, dividends paid by companies in the S&P 500 rose 5.05% last year, according to Howard Silverblatt, senior index analyst at S&P Dow Jones Indices, and he estimated they will likely increase nearly 5.3% this year.

    — CNBC’s Michael Wayland, Alex Sherman, Robert Hum, Amelia Lucas and Jonathan Vanian contributed to this story.

    Disclosure: Comcast owns NBCUniversal, the parent company of CNBC.

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  • Stocks making the biggest moves midday: Intel, Chipotle, Juniper Networks and more

    Stocks making the biggest moves midday: Intel, Chipotle, Juniper Networks and more

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  • Chipotle Mexican Grill easily tops earnings estimates, as price hikes help offset higher food prices

    Chipotle Mexican Grill easily tops earnings estimates, as price hikes help offset higher food prices

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    Food is served at a Chipotle restaurant on in Chicago, Illinois.

    Scott Olson | Getty Images

    Chipotle Mexican Grill on Thursday reported quarterly earnings that beat expectations, helped by higher menu prices for its burritos and bowls.

    Shares of the company rose more than 5% in extended trading.

    Here’s what the company reported compared with what Wall Street was expecting, based on a survey of analysts by LSEG, formerly known as Refinitiv:

    • Earnings per share: $11.36 adjusted vs. $10.55 expected
    • Revenue: $2.47 billion, in line with expectations

    The burrito chain reported third-quarter net income of $313.2 million, or $11.32 per share, up from $257.1 million, or $9.20 per share, a year earlier. Excluding corporate restructuring costs, Chipotle earned $11.36 per share.

    Beef and queso costs rose this quarter, largely offsetting last year’s menu price hikes. Earlier this month, Chipotle raised menu prices for the first time in more than a year, citing inflation.

    The company had paused its aggressive price hikes earlier this year as consumers pulled back their restaurant spending. Still, CEO Brian Niccol has maintained that Chipotle has pricing power and more room to run.

    Net sales climbed 11.3% to $2.47 billion. Same-store sales rose 5%, beating StreetAccount estimates of 4.6%. The company credited higher transactions and menu prices for the quarter’s same-store sales growth.

    Chipotle opened 62 new restaurants during the quarter. All but eight of those locations featured a “Chipotlane,” a drive-thru lane reserved for picking up digital orders.

    Looking to 2024, the company expects that it will open 285 to 315 new restaurants.

    Chipotle also reiterated its forecast for 2023 same-store sales growth in the mid-to-high single digit range.

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  • 5 things to know before the stock market opens Monday

    5 things to know before the stock market opens Monday

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    Here are the most important news items that investors need to start their trading day:

    1. Bond yield boost

    U.S. stock futures slid Monday morning as the 10-year Treasury note yield again ticked above 5% — a level it hit Thursday for the first time since 2007. Earnings and inflation data will help to shape whether equities bounce back from a down week. The Dow Jones Industrial Average fell 1.6%, the S&P 500 dropped 2.4% and the Nasdaq Composite shed 3.2% last week. A string of major earnings reports are due Tuesday through Thursday. The personal consumption expenditures data out Friday will offer clues about whether the Federal Reserve will hike interest rates again this year. Follow live market updates here.

    2. Tech torrent

    The tech sector, which has largely driven market gains this year, will headline a busy stretch of earnings this week. Other key reports will come from the transportation and food and beverage spaces. Investors will focus on General Motors and Ford results as executives will answer questions about the effects of the more than month-long United Auto Workers strike. Here are the major reports this week:

    3. Aid arrives in Gaza

    The first humanitarian aid convoys since the start of the Israel-Hamas war arrived in Gaza over the weekend, and more shipments of food, water and medical supplies are expected Monday. U.S. President Joe Biden spoke to Israeli Prime Minister Benjamin Netanyahu on Sunday, and said there will be a “continued flow” of aid into Gaza. Israel intensified airstrikes on the besieged area in recent days, as it holds off on a potential ground invasion. Leaders around the globe are trying to prevent the conflict from turning into a broader war. Follow live updates on the conflict here.

    4. Oil consolidation ramps up

    5. More Google scrutiny

    Another country is probing Alphabet’s Google for potential anticompetitive practices. Japan’s Fair Trade Commission said it would investigate potential antitrust violations related to Google’s search engine and its apps and platforms. The move in Japan follows scrutiny over allegations of anticompetitive conduct in the European Union and United States. A Google spokesperson told CNBC that Android is an open platform that ensures “users always have a choice to customize their devices to suit their needs, including the way they browse and search the internet, or download apps.”

    – CNBC’s Lisa Kailai Han, Ruxandra Iordache, Matt Clinch and Arjun Kharpal contributed to this report.

    — Follow broader market action like a pro on CNBC Pro.

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  • These 20 growth stocks are worth considering on a pullback, says Citi

    These 20 growth stocks are worth considering on a pullback, says Citi

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    Citi has released a list of 20 large-cap growth stocks that it says present opportunities in the event of a pullback.

    “Our call since early summer has been to hold Growth and look to buy on pullbacks,” Citi analyst Scott Chronert said in a note released Monday, adding that Citi has had a tactical preference for cyclicals. “However, on the heels of the strong Cyclicals surge during June and July, and our upwardly revised S&P 500 target of 4600, the messaging has been to buy on pullbacks more broadly,” he wrote.

    Citi also notes that the Russell 1000 Growth Index
    RLG
    has sold off more than 6% from its mid-July high, although two-thirds of the stocks in the index are down 10% or more, with one-third down more than 20%. “This sets up for interesting intermediate to long-term stock selection opportunities,” Chronert said.

    Related: Preorders for the iPhone 15 have begun, and here’s a sign they’ve been ‘solid’

    The analyst acknowledged that there is still a risk of economic softening ahead, if not a recession. “Yet, the argument that Growth stocks can show fundamental resilience during periods of broader economic weakening is a theme that we have considered for several years now,” he said.

    Set against this backdrop, the analyst firm has compiled a tech-heavy list of 20 stocks that have a buy rating from Citi, have at least 75% of market cap assigned to growth, according to Russell, and have experienced a decline of 10% or more from year-to-date highs since March 31. Other common characteristics of the stocks include consensus estimates of free cash flow per share above March 31 levels and free cash flow per share within or above market-implied five-year-forward estimates.

    Tech heavyweights Apple Inc.
    AAPL,
    +0.74%
    and NVIDIA Corp.
    NVDA,
    +1.47%
    are on the list, along with Pinterest Inc.
    PINS,
    -2.47%    ,
    Lam Research Corp.
    LRCX,
    +0.24%    ,
    Teradata Corp.
    TDC,
    +0.36%    ,
    Datadog Inc.
    DDOG,
    +0.09%    ,
    MongoDB Inc.
    MDB,
    -0.73%    ,
    HubSpot Inc.
    HUBS,
    +0.18%
    and KLA Corp.
    KLAC,
    +0.79%    .
    The other stocks cited by Citi are Lockheed Martin Corp.
    LMT,
    -0.18%    ,
    DraftKings Inc.
    DKNG,
    -1.44%    ,
    Las Vegas Sands Corp.
    LVS,
    -0.98%    ,
    Chipotle Mexican Grill Inc.
    CMG,
    -0.85%    ,
    Netflix Inc.
    NFLX,
    +1.31%    ,
    TKO Group Holdings Inc.
    TKO,
    -1.93%    ,
    Rockwell Automation Inc.
    ROK,
    +1.09%
    and Paycom Software Inc.
    PAYC,
    +0.45%    ,
    and healthcare stocks Bruker Corp.
    BRKR,
    +1.04%    ,
    Insulet Corp.
    PODD,
    -0.66%
    and Intuitive Surgical Inc.
    ISRG,
    +1.75%    .

    Related: Will Nvidia stock be like Apple or Cisco in the AI era?

    Shares of Apple, which recently launched its iPhone 15, are down 5.5% in the last three months. Shares of chip maker NVIDIA are up 2.8% over the same period, while Lockheed Martin is down 8.9% and DraftKings is up 8.6%. Las Vegas Sands is down 21.8% and Chipotle is down 8.8%, while Netflix is down 7.8%.

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  • Cava prices IPO at $22 per share, above stated range

    Cava prices IPO at $22 per share, above stated range

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    The Cava logo is displayed at a Cava location in Pasadena, California, Feb. 6, 2023.

    Mario Tama | Getty Images News | Getty Images

    Mediterranean fast-casual restaurant chain Cava priced its initial public offering at $22 per share, above a previously stated range, the company said Wednesday.

    Cava said it sold 14.4 million shares, which at a price of $22 per share, raises nearly $318 million. The company on Monday raised its pricing expectations to a range of $19 to $20 per share.

    At $22 per share, the company is valued at roughly $2.45 billion, based on an outstanding share count of more than 111 million shares.

    Shares are expected to debut on the public markets Thursday and trade under the stock symbol CAVA.

    Cava, founded in 2006, opened its first location in 2011 and now operates more than 260 restaurants. It has drawn frequent comparison to Chipotle Mexican Grill for its build-your-own-entree style of dining.

    Last year, Cava reported net sales of $564.1 million, up 12.8% from the year prior. However, its reported net loss was $59 million, wider than a net loss of $37.1 million in 2021.

    — CNBC’s Amelia Lucas contributed to this report.

    Correction: Cava raised its pricing expectations for its initial public offering Monday. An earlier version of this story misstated the day.

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  • Chipotle Mexican Grill’s restaurant traffic grows as the chain proves its pricing power

    Chipotle Mexican Grill’s restaurant traffic grows as the chain proves its pricing power

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    Chipotle Mexican Grill on Tuesday reported quarterly earnings and revenue that topped analysts’ expectations, fueled by better than expected same-store sales growth.

    Like McDonald’s, Chipotle said traffic to its restaurants grew during the first quarter despite higher menu items. Chipotle’s menu prices are up roughly 10% from a year earlier. CEO Brian Niccol said the chain has demonstrated that it has pricing power.

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    “We don’t want to be in front of the inflationary environment, but we also don’t want to fall behind,” he said on the company’s conference call.

    Pedestrians wearing protective masks walk in front of a Chipotle restaurant in San Francisco, California, April 19, 2021.

    David Paul Morris | Bloomberg | Getty Images

    For now, Chipotle is pausing price increases, Niccol said on CNBC’s “Closing Bell.”

    Shares of the company rose more than 7% in extended trading.

    Here’s what the company reported compared with what Wall Street was expecting, based on a survey of analysts by Refinitiv:

    • Earnings per share: $10.50 vs. $8.92 expected
    • Revenue: $2.37 billion vs. $2.34 billion expected

    Chipotle reported first-quarter net income of $291.6 million, or $10.50 per share, up from $158.3 million, or $5.59 per share, a year earlier. The company’s menu price hikes and lower avocado prices helped improve profit margins compared with the year-ago period.

    Revenue climbed 17.2%, to $2.37 billion, from $2 billion during the year-earlier period. Same-store sales rose 10.9%, topping StreetAccount estimates of 8.6%. 

    Niccol said that higher-income consumers are returning to restaurants more frequently. Even lower-income diners are visiting more often than they were in the prior six months, although their traffic remains down from a year ago. Overall, traffic rose roughly 4% in the quarter, reversing last quarter’s decline.

    In February, executives said January’s same-store sales grew by double digits. A year earlier, the company saw sluggish sales as the omicron Covid outbreak put pressure on staffing and caused some temporary store closures.

    Chipotle’s chicken al pastor is on track to be the chain’s most popular limited-time protein option ever, Niccol said on the company’s conference call. The company launched it in mid-March.

    Digital orders accounted for nearly 40% of sales during the quarter. Chipotle customers have been ordering their burritos and tacos more in person compared with the year-ago period.

    Executives also outlined changes coming to restaurants to improve speed of service and accuracy. The chain has been testing new grills that cook faster and more consistently. It has also been experimenting with how to staff its two make lines to keep up with demand from both in-person diners and digital orders.

    The company opened 41 new locations during the quarter, 34 of which included its drive-thru lanes reserved for digital order pickup.

    Looking to the rest of the year, Chipotle is anticipating same-store sales growth in the mid-to-high single digits. It’s expecting the same range for its second-quarter same-store sales growth, roughly in line with StreetAccount estimates of 5.8%.

    The company reiterated its plans to open between 255 to 285 new restaurants during 2023.

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  • First Republic’s ‘miserable moment’ is different from the 2008 contagion, Jim Cramer says

    First Republic’s ‘miserable moment’ is different from the 2008 contagion, Jim Cramer says

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    First Republic Bank‘s shaky deposit footing and dismal earnings report won’t trigger the chain reaction that investors fear, Jim Cramer said on Tuesday, but could still drag on the market. 

    Unlike other bank failures, including Silicon Valley Bank’s recent collapse, First Republic’s troubles have largely stemmed from its inability to save itself, even with a multi-billion dollar lifeline from other major banks, he explained. 

    “There’s one big difference between now and 2008: This time there is no systemic contagion,” Cramer said. “It’s a miserable moment for First Republic — once a bank beloved by the rich and famous — but it’s an all-clear event for everyone else.” 

    Outside of First Republic, which saw its stock tumble over 49% on Tuesday, there were some other big losers on the day. UPS dropped nearly 10% on a disappointing earnings report, while life science and medical diagnostics company Danaher fell 8% and hit a 52-week low.

    But there were plenty of winners Tuesday. PepsiCo boosted its outlook for the year and hit a new 52-week high. General Electric also beat on the top and bottom lines, while McDonald’s hit a new 52-week high. 

    After the close, Chipotle beat estimates while tech giants Microsoft and Alphabet also exceeded analysts’ expectations. 

    “While all three stocks jumped in after-hours trading, it might not matter, though, to tomorrow’s action, given the obsessive focus on this broken, darn bank,” Cramer said.

    In response, a First Republic spokesperson told CNBC: “We remain fully committed to serving our communities, and we are grateful for the ongoing support of our clients and colleagues. Despite the uncertainty of the past two months, and while average account sizes have decreased, we have retained over 97% of client relationships that banked with us at the start of the first quarter.”

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    Cramer: There's nothing like a banking crisis to bring this market to its knees

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  • Chipotle accuses Sweetgreen of trademark infringement over its ‘chipotle chicken’ bowl | CNN Business

    Chipotle accuses Sweetgreen of trademark infringement over its ‘chipotle chicken’ bowl | CNN Business

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    New York
    CNN
     — 

    Chipotle Mexican Grill is suing rival Sweetgreen for trademark infringement over the latter’s recently released salad bowl.

    In a lawsuit filed Tuesday, Chipotle said that Sweetgreen’s “Chipotle Chicken Burrito Bowl” is being marketed in a “very similar and directly competitive” manner that is similar to Chipotle’s chicken burrito bowl. Sweetgreen released the salad last week, with a press release saying the new menu item uses “chipotle spices.”

    Chipotle argues that the Sweetgreen salad not only has similar ingredients, including chicken, a grain base (i.e. rice) and black beans, but also took issue with Sweetgreen’s marketing because it accuses its rival of “making prominent use of the famous Chipotle trademark” in ads.

    Sweetgreen said it is aware of Chipotle’s lawsuit, but it doesn’t comment on pending litigation.

    The salad chain’s shares fell more than 10% on the news Wednesday.

    Chipotle also accused Sweetgreen of using a “font nearly identical” to Chipotle’s on its website promoting the new salad. Some of Sweetgreen’s ads also use color that’s “nearly identical” to Chipotle’s trademarked Adobo Red.

    In a statement to CNN, Chipotle said it is “committed to protecting our valuable trademarks and intellectual property,” adding that “consistent with that, we will take appropriate actions whenever necessary to protect our rights and our brand.”

    Chipotle

    (CMG)     said in its lawsuit that it reached out to Sweetgreen to stop and didn’t receive a response, claiming that Sweetgreen “continued its infringing conduct.” It suggested that Sweetgreen alter the name of its new bowl by using the word chipotle in lower case and re-naming it as a “chicken bowl with chipotle.”

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  • Covid’s ‘legacy of weirdness’: Layoffs spread, but some employers can’t hire fast enough

    Covid’s ‘legacy of weirdness’: Layoffs spread, but some employers can’t hire fast enough

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    A sign for hire is posted on the window of a Chipotle restaurant in New York, April 29, 2022.

    Shannon Stapleton | Reuters

    Job cuts are rising at some of the biggest U.S. companies, but others are still scrambling to hire workers, the result of wild swings in consumer priorities since the Covid pandemic began three years ago.

    Tech giants Meta, Amazon and Microsoft, along with companies ranging from Disney to Zoom, have announced job cuts over the past few weeks. In total, U.S.-based employers cut nearly 103,000 jobs in January, the most since September 2020, according to a report released earlier this month from outplacement firm Challenger, Gray & Christmas.

    Meanwhile, employers added 517,000 jobs last month, nearly three times the number analysts expected. This points to a labor market that’s still tight, particularly in service sectors that were hit hard earlier in the pandemic, such as restaurants and hotels.

    The dynamic is making it even harder to predict the path of the U.S. economy. Consumer spending has remained robust and surprised some economists, despite headwinds such as higher interest rates and persistent inflation.

    All of it is part of the Covid pandemic’s “legacy of weirdness,” said David Kelly, global chief strategist at J.P. Morgan Asset Management.

    The Bureau of Labor Statistics is scheduled to release its next nonfarm payroll on March 3.

    Some analysts and economists warn that weakness in some sectors, strains on household budgets, a drawdown on savings and high interest rates could further fan out job weakness in other sectors, especially if wages don’t keep pace with inflation.

    Wages for workers in the leisure and hospitality industry rose to $20.78 per hour in January from $19.42 a year earlier, according to the most recent data from the Bureau of Labor Statistics.

    “There’s a difference between saying the labor market is tight and the labor market is strong,” Kelly said.

    Many employers have faced challenges in attracting and retaining staff over the past few years, with challenges including workers’ child care needs and competing workplaces that might have better schedules and pay.

    With interest rates rising and inflation staying elevated, consumers could pull back spending and spark job losses or reduce hiring needs in otherwise thriving sectors.

    “When you lose a job you don’t just lose a job — there’s a multiplier effect,” said Aneta Markowska, chief economist at Jefferies.

    That means while there might be trouble in some tech companies, that could translate to lower spending on business travel, or if job loss rises significantly, it could prompt households to pull back sharply on spending on services and other goods.

    The big reset

    Some of the recent layoffs have come from companies that beefed up staffing over the course of the pandemic, when remote work and e-commerce were more central to consumer and company spending.

    Amazon last month announced 18,000 job cuts across the company. The Seattle-based company employed 1.54 million people at the end of last year, nearly double the number at the end of 2019, just before the pandemic, according to company filings.

    Microsoft said it’s cutting 10,000 jobs, about 5% of its workforce. The software giant had 221,000 employees as of the end of June last year, up from 144,000 before the pandemic.

    Tech “used to be a grow-at-all-costs sector, and it’s maturing a little bit,” said Michael Gapen, head of U.S. economic research at Bank of America Global Research.

    Other companies are still adding employees. Boeing, for example, is planning to hire 10,000 people this year, many of them in manufacturing and engineering. It will also cut around 2,000 corporate jobs, mostly in human resources and finance departments, through layoffs and attrition. The growth aims to help the aerospace giant ramp up output of new aircraft for a rebound in orders with large sales to airlines like United and Air India.

    Airlines and aerospace companies were devastated early in the pandemic when travel dried up and are now playing catch-up. Airlines are still scrambling for pilots, a shortage that has limited capacity, while demand for experiences such as travel and dining has surged.

    Chipotle is planning to hire 15,000 workers as it gears up for a busier spring season and to support its expansion.

    Holding on

    Businesses large and small are also finding they have to raise wages to attract and retain workers. Industries that fell out of favor with consumers and other businesses, such as restaurants and aerospace, are rebuilding workforces after shedding workers. Walmart said it would raise minimum pay for store employees to $14 an hour to attract and retain workers.

    The Miner’s Hotel in Butte, Montana, raised hourly pay for housekeepers by $1.50 to $12.50 for that position in the last six weeks because of a high turnover rate, Cassidy Smith, its general manager.

    Airports and concessionaires have also been racing to hire workers in the travel rebound. Phoenix Sky Harbor International Airport has been holding monthly job fairs and offers some staff child-care scholarships to help hiring.

    Austin-Bergstrom International Airport, where schedules by seats this quarter has grown 48% from the same period of 2019, has launched a number of initiatives, such as $1,000 referral bonuses, and signing and retention incentives for referred staff.

    The airport also raised hourly wages for airport facilities representatives from $16.47 in 2022 to $20.68 in 2023.

    “Austin has a high cost of living,” said Kevin Russell, the airport’s deputy chief of talent.

    He said employee retention has improved.

    Electricians, plumbers and heating-and-air conditioning technicians in particular, however, have been difficult to retain because they can work at other places that aren’t 24/7 and at at higher pay, he said.

    Many companies’ new workers need to be trained, a time-consuming element for some industries to ramp back up, even if it’s gotten easier to attract new employees.

    “Hiring is not a constraint anymore,” Boeing CEO Dave Calhoun said on an earnings call in January. “People are able to hire the people they need. It’s all about the training and ultimately getting them ready to do the sophisticated work that we demand.”

    — CNBC’s Amelia Lucas contributed to this article.

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  • Fast food reigns supreme as inflation weighs on pricier restaurants

    Fast food reigns supreme as inflation weighs on pricier restaurants

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    A girl waiting in line to pick up an order at a McDonald’s restaurant.

    Oleksii Chumachenko | SOPA Images | Lightrocket | Getty Images

    Fast-food chains are looking like the big winners in the fourth quarter — and beyond — as fast-casual and casual-dining restaurants struggle to attract customers.

    Many publicly traded restaurant companies haven’t reported their latest quarterly results yet, but for those that have, a pattern is emerging. Inflation-weary customers pulled back their restaurant spending during the holiday season, just as they spent less than expected at retailers. Savvy fast-food chains appealed to those consumers with value menus and enticing promotions, drawing in customers across the income spectrum.

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    Generally, the fast-food sector fares better than the rest of the industry during times of economic uncertainty and downturns.

    Take McDonald’s, for example. The fast-food giant said U.S. same-store sales climbed 10.3%, helped in part by low-income consumers returning more frequently than they had for the prior two quarters. Executives also credited the success of its Adult Happy Meal promotion and the annual return of the McRib for its strong sales growth. Its U.S. traffic increased for the second consecutive quarter, bucking the industry trend.

    Likewise, rival Yum Brands reported solid U.S. demand. Taco Bell’s domestic same-store sales climbed 11%, boosted by increased breakfast orders, the return of Mexican Pizza and its value meals. Pizza Hut’s U.S. same-store sales grew 4%, while KFC’s ticked up 1% as it faced tough year-ago comparisons.

    More fast-food earnings are on deck in the coming weeks. Burger King owner Restaurant Brands International is slated to announce its fourth-quarter results on Tuesday, while Domino’s Pizza will post its earnings Feb. 23.

    ‘We just didn’t see that pop’

    In contrast to McDonald’s and Yum’s strong results, Chipotle Mexican Grill on Tuesday reported quarterly earnings and revenue that fell short of Wall Street’s estimates for the first time in more than five years. CEO Brian Niccol maintained that the burrito chain’s price hikes haven’t led to “meaningful resistance” from customers.

    Instead, Chipotle executives presented a laundry list of reasons why its performance disappointed: bad weather, the underperforming launch of Garlic Guajillo Steak, tough comparisons to the previous year’s brisket launch and seasonality.

    Customers order from a Chipotle restaurant at the King of Prussia Mall in King of Prussia, Pennsylvania.

    Mark Makela | Reuters

    “As we got around the holidays, we just didn’t see that pop, that momentum, that we normally see … frankly, we started the quarter soft, and we ended the quarter soft,” Chipotle Chief Financial Officer Jack Hartung said on the company’s conference call, comparing the decline in December to weaker retail sales at that time.

    Chipotle said that traffic turned positive in January. However, the chain is facing easy comparisons to a year earlier, when Omicron outbreaks forced Chipotle and other chains to shutter early or temporarily close locations. And Bank of America analyst Sara Senatore noted in a research note on Wednesday that January’s unseasonably warm weather has been supporting demand for the broader industry.

    Rival fast-casual chains haven’t reported their fourth-quarter earnings yet. Shake Shack is set to share its results on Feb. 16. However, in early January, it announced preliminary same-store sales growth that fell short of Wall Street’s estimates. Sweetgreen is slated to report its results on Feb. 23, while Portillo’s is scheduled for March 2.

    Casual-dining concerns

    Fast-casual restaurants’ struggles are an even worse sign for the casual-dining segment.

    For more than a decade, casual-dining restaurants have struggled to attract customers as Chipotle, Sweetgreen and Shake Shack have stolen their customers. So the likes of Red Lobster and Applebee’s have turned to offering deep discounts or spending big bucks on advertising.

    Soaring inflation has compounded the issue, particularly for restaurant companies like Brinker International, which is trying to turn around Chili’s Grill and Bar.

    A customer walks towards the entrance of a Brinker International Inc. Chili’s Grill & Bar restaurant in San Antonio, Texas.

    Callaghan O’Hare | Bloomberg | Getty Images

    At the start of the month, Brinker reported that Chili’s traffic fell 7.6% for the quarter ended Dec. 28. Brinker CEO Kevin Hochman, the former head of KFC’s U.S. business, told analysts on the company’s conference call that the decline was expected as it tries to shed less profitable transactions. Chili’s has hiked its prices and cut down on coupons as part of the strategy.

    More full-service restaurants are expected to report their results later this month. Outback Steakhouse owner Bloomin’ Brands is slated to make its announcement on Feb. 16.

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  • Pro Picks: Watch all of Wednesday’s big stock calls on CNBC

    Pro Picks: Watch all of Wednesday’s big stock calls on CNBC

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  • Cramer’s week ahead: Take advantage of the bull market by selling some shares

    Cramer’s week ahead: Take advantage of the bull market by selling some shares

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    CNBC’s Jim Cramer on Friday advised investors to ring the register on some of their positions to take advantage of the bull market. 

    “I don’t know if we can continue this week’s bizarrely bullish behavior, but it’s worth sticking around and … you can trim a bit of some stock that you’re up a lot,” he said

    Stocks fell on Friday after a strong January jobs report renewed fears that the Federal Reserve will continue hiking interest rates. The S&P 500 and Nasdaq Composite still managed to end the week on the positive side, with the tech-heavy index notching its fifth consecutive winning week.

    Cramer also reviewed next week’s slate of earnings. All estimates for earnings, revenue and economic data are courtesy of FactSet.

    Monday: Tyson Foods, Simon Property Group

    Tyson Foods

    • Q1 2023 earnings release at 7:30 a.m. ET; conference call at 9 a.m. ET
    • Projected EPS: $1.31
    • Projected revenue: $13.51 billion

    Cramer said the conference call should give insight into the state of food inflation at grocery stores.

    Simon Property Group

    • Q4 2022 earnings release at 4:05 p.m. ET; conference call at 5 p.m. ET
    • Projected EPS: $3.15
    • Projected revenue: $1.29 billion

    “They may pull a rabbit out of a hat” despite it being a tough time for companies in the office property business, he said.

    Tuesday: Chipotle Mexican Grill, Enphase Energy

    Chipotle Mexican Grill

    • Q4 2022 earnings release at 4:10 p.m. ET; conference call at 4:30 p.m. ET
    • Projected EPS: $8.91
    • Projected revenue: $2.23 billion

    Cramer said he expects the quarter to be phenomenal given the company’s plan to hire 15,000 restaurant workers ahead of the busy spring months.

    Enphase Energy

    • Q4 2022 earnings at 4:05 p.m. ET; conference call at 4:30 p.m. ET
    • Projected EPS: $1.27
    • Projected revenue: $707 million

    “I always say the same thing — if you believe that solar can be even bigger than it is now, then Enphase is the right stock for you,” he said.

    Wednesday: CVS Health, Disney

    CVS Health

    • Q4 2022 earnings release at 6:30 a.m. ET; conference call at 8 a.m. ET
    • Projected EPS: $1.92
    • Projected revenue: $76.33 billion

    Cramer said that he’s curious why the company’s stock has become “a real bow-wow.”

    Disney

    • Q1 2023 earnings release at 4:05 p.m. ET; conference call at 4:30 p.m. ET
    • Projected EPS: 79 cents
    • Projected revenue: $23.44 billion

    He predicted that Disney’s performance will improve now that CEO Bob Iger is back at the company’s helm.

    Thursday: PepsiCo, PayPal

    PepsiCo

    • Q4 2022 earnings release at 6 a.m. ET; conference call at 8:15 a.m. ET
    • Projected EPS: $1.65
    • Projected revenue: $26.84 billion

    “I actually think they will deliver good numbers on Thursday, but if we have a growth hangover it might not matter to the market,” he said.

    PayPal

    • Q4 2022 earnings release at 4:15 p.m. ET; conference call at 5 p.m. ET
    • Projected EPS: $1.20
    • Projected revenue: $7.39 billion

    “Who needs PayPal when Apple Pay is built into your phone?” he said.

    Friday: Enbridge, Newell Brands

    Enbridge

    • Q4 2022 earnings release before the opening bell; conference call at 9 a.m. ET
    • Projected EPS: 54 cents
    • Projected revenue: $10 billion

    Cramer said he wants to hear the company talk about where the price of natural gas is headed.

    Newell Brands

    • Q4 2022 earnings release at 6 a.m. ET; conference call at 8:30 a.m. ET
    • Projected EPS: 11 cents
    • Projected revenue: $2.23 billion

    The company had a “compelling” turnaround, according to Cramer.

    Disclaimer: Cramer’s Charitable Trust owns shares of Apple and Disney.

    Cramer's game plan for the trading week of Feb. 6

    Jim Cramer’s Guide to Investing

    Click here to download Jim Cramer’s Guide to Investing at no cost to help you build long-term wealth and invest smarter.

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  • I see this year’s budding stock rally signaling a different kind of bull market, one that’s not so reliant on just a few stocks

    I see this year’s budding stock rally signaling a different kind of bull market, one that’s not so reliant on just a few stocks

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    Jim Cramer at NYSE with bull. June 30, 2022.

    Virginia Sherwood | CNBC

    This nascent bull market started with the peak in interest rates and the dollar back in the fall and then broadened to include bank and semiconductor stocks in 2023. Is it fragile? Is it alchemy? Is it real? We’ll know after we see the quarterly earnings this week from the likes of Club holdings Apple (AAPL), Meta Platforms (META) Alphabet (GOOGL) and Amazon (AMZN), as well as what the Federal Reserve decides at its two-day meeting ending Wednesday and what the monthly nonfarm payroll numbers show Friday.

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  • Bill Ackman doubts Fed can tame prices: ‘We’ll have to ultimately accept a higher level of inflation’

    Bill Ackman doubts Fed can tame prices: ‘We’ll have to ultimately accept a higher level of inflation’

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  • Unions could face a big obstacle in 2023 if the economy falls into a recession

    Unions could face a big obstacle in 2023 if the economy falls into a recession

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    Hannah Whitbeck (C) of Ann Arbor, Michigan, speaks as Alydia Claypool (L) of Overland Park, Kansas, and Michael Vestigo (R) of Kansas City, Kansas, all of whom say they were fired by Starbucks, listen during the “Fight Starbucks’ Union Busting” rally and march in Seattle, Washington, on April 23, 2022.

    Jason Redmond | AFP | Getty Images

    The union movement that kicked off across the country more than a year ago has continued its momentum in 2022, with workers in warehouses, coffee shops, grocery stores and airlines pushing for representation.

    Working conditions during the pandemic pushed many of these frontline workers to organize, but fears about the economy and a potential recession could stand to curb the union boom if the job market shifts.

    Unions can help workers secure better pay, schedules and job security through contract agreements, but some organizers claim their employers retaliate against them and endanger their livelihoods.

    Workers like Robert “Rab” Bradlea, 32, are willing to take on this risk, despite recession talk. Bradlea scaled back his hours at Trader Joe’s Wine Store in New York City and picked up a second job as he and some of his coworkers sought to unionize.

    Bradlea said the move to organize under the United Food and Commercial Workers International Union had the support of most of his coworkers. Some opposed joining a union, either because of previous experience or fear of losing their jobs. But Bradley thought only he and his fellow organizers were putting themselves at risk.

    “I thought they would look for ‘bad apples’ and weed out organizers specifically, rather than torch an entire store,” Bradlea said.

    Instead, before the beloved wine store could even file a petition for a union election, Trader Joe’s abruptly closed the location on Aug. 11, telling employees that same day. Trader Joe’s spokesperson Nakia Rohde said in a statement to CNBC that the grocer opted to close the “underperforming” store to support its Union Square grocery store using the wine shop’s space ahead of the holiday season.

    2022’s union boom

    So far, this year has proved to be a success for the labor movement. Union petitions from Oct. 1 through June 30 were up 58% over the prior year, to 1,892, according to the National Labor Relations Board.

    By May of this year, petitions for the year had exceeded the total number of filings in all of last year. The NLRB has yet to release full year data, but a CNBC analysis of filings shows nearly 900 more petitions in fiscal year 2022 over last year’s numbers.

    This comes at a time when public approval of labor unions continues to climb. Recent Gallup data show  71% of Americans now approve of labor unions, up from 68% last year and 64% pre-pandemic. The measure is at its highest level on record since 1965.

    The job market, particularly for retail trade, accommodation, food services and transportation and warehousing workers, is still favoring employees, with a combined 1 million more job openings today in those three sectors compared with pre-pandemic levels.

    “Right now in the retail space, we have so many more jobs than we do workers, and that puts disproportionate power in our hands right now because the company needs them almost as much as we need them,” said Hannah Smith, an employee at the recently unionized REI store in Berkeley, California.

    REI did not respond to a request for comment from CNBC.

    The shift in the balance of power has led some employers to hike pay and enhance other benefits. For example, Amazon said on Wednesday that it’s hiking average hourly pay from $18 to more than $19 for warehouse and delivery workers. The announcement comes ahead of its annual Prime Day promotion and a busy holiday season, as well as a union election in Albany next month.

    As the Federal Reserve continues to aggressively raise interest rates to fight inflation and cool down the economy, market watchers, economists and executives are warning of a potential recession in 2023. If the economy cools off, the union movement may follow suit, according to Catherine Creighton, director of Cornell University’s Industrial and Labor Relations branch in Buffalo. But it seems unlikely in the short term.

    “I think it will certainly make it more difficult if we do have a recession, where it’s harder for employees to find other employment, they [may] be less likely to take the risk of unionization,” Creighton said. “I don’t see that we are in that position at this point, because employers are still having a really hard time filling jobs, the baby boomers have retired and all evidence points to the fact that the labor market is going to be favorable to employees in the near future.”

    For now, advocates believe the momentum will be hard to slow down. Whether it’s petitions or other wins, like a California law that creates a council to govern the fast-food industry labor conditions, 2022 has been a banner year for organizing.

    “I think it’s the collective action that you’re seeing that isn’t going to get stopped by whatever the recessionary forces are, because working people have walked through fire during this pandemic, showed up every day to work, in many cases risk their lives,” said Mary Kay Henry, president of the Service Employees International Union. “And they’re ready to expect more in their work life and demand dignity and respect on the job.”

    Starbucks petitions slow down

    Some employees say interest in organizing has fallen somewhat as their employers appear to fight back, using tactics like shuttering stores, firing organizers and offering tantalizing benefits to non-union shops only.

    At Starbucks, for example, the number of union petitions fell every month from March through August. There was a slight uptick in September with 10 petitions filed so far, according to the NLRB.

    Since interim CEO Howard Schultz returned to the company in April, Starbucks has adopted a more aggressive strategy to oppose the union push and invest in its workers.

    In May, the company announced enhanced pay hikes for non-unionized stores and extra training for baristas that went into effect in August after holding feedback sessions with its employees. The union has said the coffee giant is illegally withholding the benefits from cafes, but Starbucks maintains it cannot offer new benefits without negotiations for union shops. Legal experts predict the benefits battle will wind up before the NLRB.

    “Our focus is on working directly with our partners to reimagine the future of Starbucks. We respect our partners rights to organize but believe that working directly together – without a 3rd party – is the best way to elevate the partner experience at Starbucks,” Starbucks spokesperson Reggie Borges told CNBC.

    Tyler Keeling works as barista trainer at a Starbucks in Lakewood, California, which has voted to unionize, and also is organizing other stores with Starbucks Workers United. He said the additional benefits not being offered to unionized stores has both intimidated and motivated people, and that better pay is important in this economic climate.

    “People are seeing that Starbucks is willing to kind of mess with their livelihood to prevent this union, and that scares people. But at the end of the day, as far as it is driving people to not organize, it’s also driving people to organize,” Keeling said.

    He added that he believes once the union makes continued progress on having fired workers reinstated and is successful in having benefits extended to union stores, there will be more headway made on petitions.

    And stores are still pushing for more despite the threat of a looming recession. Billie Adeosun, Starbucks barista and organizer in Olympia, Washington, said unionizing is a “big risk,” claiming losing your job is a “real possibility,” but the prospect of successful contract negotiations with better pay and benefits is a motivator.

    “Most of us make $15 to $18 an hour and none of us are working 40 hours a week, and that’s just not a living wage,” Adeosun said. “A lot of us have to get a second job or rely on government assistance to pay our bills, so yeah, we are terrified to be doing this work in spite of the economy and the fact that it is just falling apart right in front of us.”

    About 240 locations out of its 9,000 company-owned cafes have voted to unionize as of Sept. 22, according to the National Labor Relations Board. But contract negotiations could help or hinder the push to unionize the nation’s largest coffee chain.

    BTIG analyst Peter Saleh said signs of progress on a contract between the union and Starbucks could be one catalyst to reaccelerate organizing. On the other hand, if they don’t reach an agreement, workers can vote to decertify the union after a year.

    So far, Starbucks has only begun negotiating with three stores, two in New York and one in Arizona. But the company said Monday that it sent letters to 238 cafes offering a three-week window in October to start negotiations.

    And despite the petition slowdown at Starbucks, organizers’ success has inspired workers elsewhere, like Bradlea, the Trader Joe’s employee.

    “Their stores are about the same number people as the Trader Joe’s wine store. This is doable, and they’re succeeding at it,” he said.

    Power in the balance

    Even with talk of a potential recession, some workers say they’re undeterred, given the competitive job market. Brandi McNease, organizer at a now-closed location of Chipotle Mexican Grill in Augusta, Maine, said the decision to petition was driven by the power workers have and the current economic climate.

    “We looked around at the endless now-hiring signs plastered on every fast food drive-through menu and decided that we could just quit and take another job or we could fight, and if we lost, still take another job,” McNease told CNBC in an email.

    The store was the first to file for a union election at the burrito chain, and the company said the location was permanently closed due to staffing challenges, not the union petition.  Workers called the move retaliatory and have filed multiple unfair labor practice charges against the company with the NLRB, McNease said.

    Chipotle declined to comment.

    Some workers say the last recession has informed the need for better worker protections today, and now is the time to push.

    “I had coworkers who lived through the 2008 recession and had a really tough time finding jobs then,” said Smith, the REI employee in California. “Creating a union now, it felt like a way to protect for that in the future.”

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