In this Weekly Wrap, we’re looking at a decline in Hispanic spending amid immigration crackdowns, AI in hospitality businesses, Chili’s versus McDonald’s, and more.
ICE Effects on Hispanic Spending in Restaurants
The Headline: “Wingstop joins retail industry in reporting Hispanic spending decline amid immigration crackdown”
The Source: Nation’s Restaurant News
What You Need to Know:
As the Trump administration’s immigration crackdowns continue, retail and hospitality brands popular with Hispanic communities are seeing an impact on average consumer spend, including Corona and Modelo parent company, Constellation Brands; Coca-Cola; and Keurig-Dr. Pepper. A recent report from market research firm Kantar revealed that Q1 shopping rates among Hispanics fell by more than 11% year-over-year.
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“We do index more multicultural consumers relative to other restaurant brands, and I think with the heightened levels of anxiety around deportation, you can feel and hear it from our team members in the restaurants, in California specifically, but we haven’t seen a broad-based change in consumer spend across the U.S.,” he said. “This gives us the sense this a near-term dynamic that we're seeing.”
This is one of the first times that a restaurant company has directly mentioned a correlation between lower consumer spend among specific demographics and heightened fears around immigrant deportations.
During Wingstop’s earnings call earlier this year, Skipworth said that the company is “executing very specific tactics” to address these “pockets of softness” like the Hispanic community in California, including presenting more of a value-based platform to a consumer that’s sensitive to pricing.
Our Take:
As long as the current administration persists with its current immigration crackdown, we can expect this trend to continue. And if the riots in California last week are any indication, it could get worse. The dollars coming from these communities that once flowed into restaurants will simply vanish.
The most important thing the writer highlights:
“This is one of the first times that a restaurant company has directly mentioned a correlation between lower consumer spend among specific demographics and heightened fears around immigrant deportations.”
Up until now, most of the conversation has focused on the labor challenges tied to immigration crackdowns and the decline in international travel to the U.S. But now, we're discussing the financial fallout of these policies on businesses big and small.
Fast casual and QSR establishments will feel the brunt of this blowback, specifically in markets with significant immigrant demographics. But even casual sit-down spots won’t be immune. It’s pointless to speculate when this will end, or even ease, considering how uncertain policy has been. These days, only one thing is certain: uncertainty reigns.
Chili’s Levels the Playing Field with McDonald’s
The Headline: “Is Chili's as cheap as McDonald's? It is in California”
The Source: Restaurant Business Online
What You Need to Know:
According to data from Price Pulse, the pricing tool from Restaurant Business sister company Technomic, the price of a Big Mac meal compared with the budget-friendly $10.99 “3-for-Me” offer at Chili’s is more comparable in California.
We asked Technomic for the price of a Big Mac meal and the price of a Big Smasher—Chili’s deliberate Big Mac competitor—nationwide and in California.
Nationwide, the Big Smasher on the 3-for-Me offer is $10.99. That is also the price in California.
At McDonald’s, the average price of a medium Big Mac meal is $9.72.
In California, that price is $10.98. Or, based on our quick math, one cent lower than that 3-for-Me deal.
There is a significant caveat here. We’re comparing a value offer at Chili’s with the everyday price of a premium item at McDonald’s. Chili’s overall menu is still more expensive than McDonald’s overall menu, even in California.
In addition, the bulk of Chili’s business comes in the restaurant, where a server takes your order and brings you food and is paid a tip, typically about 20%. At McDonald’s you are probably going through the drive-thru. As such, the Chili’s order comes with a 20% premium. That is not nothing.
At the same time, Chili’s offer gives customers more for their money, so in effect the casual-diner’s offer is a better value.
The data is nevertheless demonstrative of the impact the $20 fast-food wage has had in the country’s largest restaurant market.
Our Take:
Chili’s seems to pop up in every article as the poster child for a restaurant chain that’s doing it right. This article sums up why that’s the case. Yes, there are other reasons, like nostalgia, service, and leaning into the delivery side of things, but at this moment in time, value is king. What’s so smart about this special is that it’s the only one like it. It’s no coincidence that it mirrors McDonald's Big Mac meal. Not only can you get a better product, but you can sit down, be served, and even order a glass of wine or a cocktail with it. In most states, it won’t cost you much more, and in California, it’s the same price.
The cherry on the sundae is this: Chili’s still has a full menu, which definitely does not match the value of a McDonald's meal. But that isn’t the point. The special gets people in the door. And as most of us know, when people go out to eat in a group, they don’t always order the same thing. One person might be there for the value, but the rest of the group may be coming in for the variety, which ends up driving the overall check higher.
Lastly, the increased minimum wage in California definitely has made it harder for QSR and fast casual places to compete. Prices have risen and consumers have taken notice.
Wonder, AI, and Blood Tests
The Headline: “Wonder is developing AI-powered meal kits with blood testing technology”
The Source: Nation’s Restaurant News
What You Need to Know:
Is Marc Lore’s Wonder poised to become the Amazon of food delivery technology? Over the past 18 months, the virtual food hall company expanded its repertoire by acquiring Blue Apron, Grubhub, and food media company, Tastemade. Now Wonder is working on a hyper-personalized meal kit with recipes derived from customers’ bloodwork.
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This week, at Fast Company's Most Innovative Companies Summit, Lore said the company is working on an app where they will visit a customer's home, perform a blood test, and create a nutrition profile based on DNA samples and AI. From there, Wonder will create a personalized 21-meal weekly plan delivered either as a meal kit (like Blue Apron) or as full, premade meals.
“We’re not ready to share additional details or a launch date just yet, but it’s on the roadmap and currently in development,” a Wonder spokesperson told NRN.
Wonder is also trying to pull away from fellow delivery companies by ditching delivery fees. In May, Wonder senior vice president Courtney Lawrie told Business Insider that the company eliminated its $1.99 delivery fee and waived service fees for Wonder+ subscribers.
"We're uniquely positioned to be able to provide that savings to customers," Lawrie said.
Wonder differs from other food delivery services like DoorDash and Uber Eats, because they serve more as delivery middlemen, whereas Wonder operates its own suite of virtual restaurants, available in varying combinations across 50 virtual food halls nationally.
Our Take:
I’m not quite sure where to start with this one. Here are the basics: Wonder is making some massive waves with its celebrity driven food hall/delivery-service-plus, as with its substantial capital raises and monster acquisitions. It has expanded far quicker than most food-focused start-ups have in recent memory.
The DNA sample nutrition profile they’re proposing is wild. Personally, I’m not sure how I feel about the whole thing — it seems a bit much — but I’m probably not their target market.
And while I’m not sold on the idea, I’ve spoken with a lot of people who are excited about it. Like everything these days, it really comes down to value. What’s it going to cost? How much are the meals going to run each week? If the value prop is there, it could take off. But if it’s priced too high, it could end up being just another idea that kills at first, especially with people who have more disposable income, but ultimately fades away when the novelty wears off.
The other comment that piqued my interest is the shift away from delivery fees. Over the past few years, third-party delivery apps have dramatically jacked up their service fees to the point where it’s sometimes cheaper to just go to the restaurant in person. Wonder tackling these fees sounds great, but the big question is: will they address their subsidiary Grubhub’s fees too? Last I checked, those are still going strong.
Not Everyone Is Embracing AI
The Headline: “Why some restaurants aren't sold on AI yet”
The Source: Restaurant Business Online
What You Need to Know:
If you attend restaurant conferences or tune in to restaurant earnings calls, you might assume that every restaurant on earth is investing in artificial intelligence.
And it’s true that most of the biggest chains are doing that. But for the broader restaurant universe, the reality is more mixed. Not every operator is sold on the promise of AI. Many are interested but have not yet taken the leap, while others remain more cautious, according to the 2025 Restaurant Technology Outlook Report published last month by Restaurant Business and Nation’s Restaurant News.
The survey of 557 restaurants of all sizes found that 21% of them are using AI today, 51% are interested in using it at some point, and 28% aren’t using it and aren’t interested.
Currently, most restaurants are using AI to create marketing materials and social media posts. This is the most common use case by a wide margin, the report found.
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However, for operators who are interested in using AI in the future, copywriting is a much lower priority. They are focused on pointing AI at more ambitious tasks, like inventory management (51%), labor management (47%) and forecasting traffic and sales (45%). Just 27% would consider using it to write marketing copy, the study found.
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And there was also a subset (19%) that said AI has no place in the hospitality business—even, apparently, in the back-of-house, where it would be invisible to customers.
Our Take:
Everyone is talking about AI. I have many friends who are incredibly bullish on it, but we have to remember that a lot of people out there don’t trust it and don’t believe it has a place in restaurants, outside of the fast casual/QSR realm. “It’s a people business,” they say. The restaurant industry has always been slow to adopt new technology. Just last week, I was in a restaurant that had a turn-of-the-century Micros POS system and still uses a handwritten ledger for reservations. You’d be surprised that this still happens in a tech-forward world.
Cases like this tend to occur more in independently owned restaurants or hotels than in chains, which have the capital, as well as an innovation team, to implement new tech. Independent restaurant owners generally don’t have those resources, and many operators I’ve spoken to have stressed how vital it is to maintain the human touch of the space, not just with guests but with staff as well.
Do I think these places will disappear? No, not yet. Maybe with the next generation they will become fewer and farther between. Tech is already part of the fabric of most restaurants, and over time, AI will integrate itself into that fabric. But there will always be holdouts, and in 10 years, I’ll be writing fondly about that “old school” place that not only doesn’t have AI but also still handwrites its checks.