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Student loan payments are back. Starbucks, Chipotle & Shack Shake beware

Americans will have to start repaying student loans again after a three-year reprieve. That could spell at least some degree of disaster for retailers and restaurateurs alike.
BTIG analysts surveyed 1,000 borrowers and found that 82% of them will resume paying back loans next month. The average monthly payment will be $250 to $300 for the roughly 45 million student loan borrowers in the country — that represents 17% of the adult population.
Roughly 60% of those surveyed said that they would dine out less often or reduce their spending when eating out.
BTIG pointed to Starbucks (NASDAQ:SBUX), Chipotle (NYSE:CMG) and Shake Shack (NYSE:SHAK) as companies that may see a slide in results as a result of the return of debt payments. Analysts cut sales and profit estimates for those “operators serving higher-income, more educated customer bases.”
“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,” analysts Peter Saleh and Ben Parent wrote in a note.
Companies of all kinds are eyeing the return of payments and how it might affect their bottom lines amid persistent inflation, higher interest rates and general global economic woes and uncertainty. Some retailers are more concerned than others.
“While we are closely monitoring the impact of student loan repayments on our customers, our guidance does not contemplate any significant impact from the restart of these payments,” Dollar General CFO Kelly Dilts said in a recent earnings call.
It’s looking risky
BTIG also cited a paper by Georgia Tech and Yale, which found that distressed student loan borrowers took on 12.3% more credit card debt relative to their peers. That could mean they have an even harder time paying back their debts.
“About one-in-five student loan borrowers have risk factors that suggest they could struggle when scheduled payments resume,” The Consumer Financial Protection Bureau warned.
Additionally, “More than one-in-thirteen student loan borrowers are currently behind on their other payment obligations. These delinquencies are higher than they were before the pandemic.”
Company comments
Signet Jewelers (SIG) isn’t counting on a huge hit from student loan repayments but it did allow for the possibility in its guidance.
For the third quarter, the company forecast sales of $1.36B to $1.41B compared to the average analyst estimate of $1.4B. For the full year, SIG expects sales of $7.1B to $7.3B compared to the estimate of $7.18B.
“On the low end of guidance, it allows for softening trends, a softer macro economy or slower recovery engagements might occur and modest higher student loan repayment impact,” SIG Chief Financial Officer Joan Hilson said in the company’s most recent earnings call.
And it’s not just student loans to be wary of.
FICO scores have dropped about 12 points since March 2022, with consumer debt balances up 30%, according to Intuit (INTU) Chief Financial Officer Sandeep Aujla said in an earnings call.
“The consumer is feeling that pressure from the higher debt payments, and that’s all before we even get into the student debt repayment starting,” Aujla said.

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