Student loan payment resumption to hit sales at these restaurants with educated customer bases, BTIG says

Published Thu, Sep 7 20233:35 PM EDTUpdated Thu, Sep 7 20234:25 PM EDT

Millions of Americans will resume paying their student loans next month, and BTIG thinks some restaurants frequented by higher-income earners could suffer from that more than others. Analyst Peter Saleh trimmed his estimates for same-store sales, a key metric used by retailers and restaurants, for Starbucks , Chipotle and Shake Shack . He now sees Shake Shack's same-store sales rising just 2.9% in 2024, down from a previous estimate of 4.4%. For Starbucks and Chipotle, he expects full-year sales rising 5% and 4%, respectively. That's down from former forecasts of 6% for Starbucks and 4.4% for Chipotle. Saleh's cuts come as student loan repayments are due to start again in October , following three years of interest rate suspension and a tumultuous Supreme Court battle . The moratorium on student loan payments was implemented in 2020 at the onset of the Covid-19 pandemic. "We believe the resumption will have an adverse impact on restaurant spending, but will likely remain a modest issue for the broader industry given the relatively small population of customers this applies to," Saleh wrote in a note Thursday. "We see a greater impact on operators serving higher-income, more educated customer bases ... leading us to trim our same-store sales and EPS estimates." A recent BTIG survey found that these repayments are more likely to disproportionately hamper higher-income earners, with nearly 75% of borrowers earning over $60,000 per year. Of the borrowers earning more than $150,000 annually, 97% planned to begin repayment next month. Given this skew toward higher-income earners, establishments frequented by such consumers will likely feel pressure. A separate BTIG survey found that Starbucks, Chipotle and Shake Shack are three restaurants with the greatest exposure to these borrowers. "While we don't expect these consumers to significantly change their habits, we do believe that some could manage their check, trade down within the menu, or modestly reduce their visit frequency," Saleh said. To be sure, the analyst does not believe these impacts will be great enough to bail on the stocks. Saleh still has a buy rating on all three names. Shares of Chipotle and Shake Shack have outperformed the broader market this year, rallying 41% and 60%, respectively. Starbucks, on the other hand, is down more than 3%. CMG SHAK,SBUX YTD mountain SBUX, CMG and SHAK year to date — CNBC's Michael Bloom contributed reporting.