Insight Flash: Will the effects of the resumption of student loan repayments be small, medium or large at your favorite limited service restaurant?
Department of Education data shows individuals aged 25-49 hold 69% of the student loan debt in the US: 30% from those aged 25-34 and 39% from 35-49*. CE data shows that limited service players have a higher exposure to these age groups than their Full Service peers.
With student loan debt repayments having resumed on October 1st, the resulting lower discretionary income in these age demos could be a headwind for Limited Service more than Full Service. Our clients can assess the impact on these two industries, and others, as borrowers face new, lower levels of discretionary income.
Student Loan Debt Effect by Restaurant Type and Age Group
Growth in consumers aged 25-34 has been lagging the overall limited service Industry this year and could fall further behind due to the resumption of student loan repayments. Consumers aged 35-44 have been in-line with the overall industry as of late and it will be important to keep an eye on this category to see just how impactful a drop in discretionary income in this age bracket will be.
Limited-Service Restaurant Sales Growth by Age Group
Not all operators have the same level of exposure as the overall industry that they operate in. Clients can leverage the demo and geo exposure cohort data to identify brands with the highest/lowest exposures to specific age brackets to see who could be most/least impacted by a drop in discretionary income from the resumption of student loan repayments.
Notable public brands highly exposed (30% or more exposed relative to limited service industry) include Sweetgreen, Cava Grill and Papa John’s. Notable public brands under-exposed (20% or less exposed relative to limited service industry) include KFC and Burger King.
KFC and Popeye’s are both highly under-exposed to 25-34 and 35-44 which may put them in an advantageous position if the resumption of student loan payments impacts discretionary incomes of those aged 25-34 and 35-44 similarly. Little Caesar’s and Culver’s could benefit from a scenario where the impact on discretionary income affects those aged 25-34 more than 35-44 as both are under-exposed to 25-34 and over-exposed to 35-44.
Student Loan Repayments: Most & Least Exposed Restaurants, 25-34 Age Group
Student Loan Repayments: Most & Least Exposed Restaurants, 35-44 Age Group
Consumer Edge is the leading provider of alternative data for consumer spending behavior, and the only provider of global revenue signals. Our data offers insights into not only student load debt and its effect on restaurants, but hundreds of industries, subindustries, tickers, and symbols. If you’d like to benefit from using Transact US or other products for other industry data year-round to track trends and dynamics like these, reach out to insights@staging.consumer-edge.com.
