Chipotle got some heat in 2024 from value-conscious diners about smaller portions but drew customers back after retraining workers to ensure "consistent and generous" portions.
ANNE D'INNOCENZIO AND DEEANN DURBIN
Associated Press
2024 YEAR IN REVIEW| ECONOMY
Value was in vogue in 2024.
Shoppers and restaurant patrons in the U.S. were choosy about where and how to spend their money as they wrestled with high housing and food prices.
Well-heeled customers traded down to Walmart and Aldi. Diners opted for fast food or home cooking instead of sit-down restaurants. Department stores struggled as buyers shopped online or at cheaper chains like H&M.
Those shifts changed the buying and eating landscape in 2024. As of Dec. 20, Coresight Research tracked 48 retail bankruptcies in the U.S., compared with 25 during the same period the previous year. At least 22 restaurant chains filed for bankruptcy in 2024, the most since 2020, according to BankruptcyData, a company that tracks filings.
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Those that thrived
WALMART: The nation's largest retailer typically shines during tough times as shoppers turn to the discounter for groceries, which account for 60% of Walmart's total business. Just like during the 2008 Great Recession, Walmart saw households with incomes of $100,000 or more making up more of its clientele. But this time around, company executives think they can keep those customers because they've expanded online services and added more stylish clothes and mannequins.
AMAZON: Online juggernaut Amazon leaned into its reputation as a destination for deals to appeal to bargain-hungry buyers. In November, it launched Amazon Haul, a low-cost storefront featuring electronics, apparel and other products priced less than $20. The company said its Prime Day event in July resulted in record sales. However, Amazon could face headwinds in 2025 with threatened tariffs on products from China and labor unrest in the U.S.
FAST CASUAL CHAINS: It was a good year for restaurant chains like Shake Shack that are a step up from fast food but still offer good value. Cava, which specializes in fresh Mediterranean food, said its revenue surged more than 33% in the first nine months of 2024 as it rapidly built new restaurants. Chipotle got some heat from value-conscious diners about smaller portions but drew customers back after retraining workers to ensure "consistent and generous" portions.
JEANS SELLERS: The wide-leg jeans silhouette drove sales across many different retailers in 2024. Macy's, Abercrombie & Fitch, Levi Strauss, Gap and Stitch Fix were among those citing the trend as a big sales booster in recent months. Value-conscious buyers could snap them up at Walmart for $29. At the high end, Gucci had wide-leg versions for $1,200.
MCDONALD'S: The year didn't begin well for McDonald's. The company's sales slumped as inflation-weary customers chose to eat at home instead of grabbing fast food. But a $5 meal deal introduced in June helped draw lower-income customers back into stores. McDonald's extended the deal through the end of 2024 and said more value is coming in 2025.
Those that struggled
TARGET: Target's cheap chic fashions and home decor have long been a big attraction, but the chain faced challenges in 2024. Unlike Walmart, Target is more reliant on discretionary items like clothing because less than a quarter of its sales come from food and beverages. It has always battled a perception of being more expensive, and analysts say its merchandise has lately been in disarray. Still, Target drew crowds on Black Friday with exclusive Taylor Swift products.
STARBUCKS: Starbucks had a tough year. Orders are getting increasingly complex, with thousands of ways to customize drinks. That's leading to long lines and incorrect pickup times on the mobile app. New offerings like olive oil-infused coffee didn't attract customers, who also grew tired of Starbucks' high prices. Starbucks hired a new CEO, Brian Niccol, in the fall to help turn things around. But labor strife, which led to strikes in December, could continue to hurt the company in 2025.
LEGACY RESTAURANTS: Several decades-old chains threw in the towel in 2024, succumbing to increasing competition, changing dining patterns and big portfolios of outdated restaurants. Red Lobster, TGI Fridays and Buca di Beppo all filed for Chapter 11 bankruptcy protection and shuttered dozens of locations. A leaner Red Lobster later exited bankruptcy under new ownership.
BIG TICKET ITEMS: At the height of the COVID-19 pandemic, U.S. consumers took advantage of low interest rates and stimulus benefits to remodel their homes and make other big purchases. Last year, they pulled back. That's been a challenge for retailers like Best Buy, the nation's largest consumer electronics chain, which noted lower sales of appliances, home theaters and gaming equipment. Home Depot and Lowe's also reported lower sales of big-ticket items, particularly for discretionary kitchen and bathroom remodeling projects.
DEPARTMENT STORES: Department stores, particularly those catering to middle-income shoppers, struggled to hold on to customers as many turn to online shopping or to fast-fashion retailers. Among the worst performers: Menomonee Falls, Wisconsin-based Kohl's, which reported its 11th consecutive quarter of sales declines in 2024. Outgoing CEO Tom Kingsbury recently owned up to merchandising mistakes, including scaling back fine jewelry, popular store label brands and petite sizes. Customers will see those categories return in 2025.
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