Trump's Deportation Policy Hits Fast Food Demand in the U.S., Industry in a 'More Stores than Customers' Phase
The Financial Times reports that the Trump administration's immigration deportation policies are weakening fast food sales in the U.S. The growth rate of chain restaurants has noticeably slowed in 2024 and 2025, disrupting the industry's long-reliance on the idea that "more mouths mean more orders."
U.S. government data shows that nearly 3 million people left the U.S. last year through deportation or voluntary departure. Economists estimate that the U.S. experienced a net outflow for the first time in decades, with more people leaving than entering.
The vast majority of those deported are from Latin America, which is a key customer demographic for the fast food industry. A 2018 study by the U.S. health department found that on any given day, 35% of the U.S. Latino population consumes fast food. The shrinking customer base directly impacts the segment with the lowest average order value and the highest frequency.
Population growth is also slowing. Census data shows that from July 2024 to July 2025, the U.S. population is expected to grow by only 0.5%. The Brookings Institution estimates that net immigration will turn negative in 2025 and is expected to continue in 2026. After a long period of birth rates being below replacement level, immigration was once the main engine of population growth.
On the store front, plans are changing. McDonald's has stated it will slow its pace of opening new stores, while Wendy's and Subway have closed hundreds of locations in the past year. Jack in the Box and Wingstop have indicated that the shrinking Latino consumer base is dragging down sales.
Morgan Stanley restaurant analyst Brian Harbour stated that population growth is certainly an important driver for the fast food industry, as nearly everyone is a customer, including low-income consumers. Analysts believe that fewer customers is not good news for fast food, which relies on foot traffic to drive sales.
From a market mechanism perspective, the burden falls on low-income and Latino families who still view fast food as a regular source of calories, while the supply comes from existing store capacities. The situation is driven by net outmigration, with funds shifting from new store capital expenditures to closing stores and slowing expansion; benefiting are existing stores that can temporarily attract customers due to lower gasoline prices, while chain brands and franchisees that based their store models on old population growth rates are under pressure.
Source: Public Information
ABAB AI Insight
Over the past decade, U.S. fast food has relied on immigration to compensate for low birth rates. With birth rates below replacement level, the daily meals contributed by Latino families have been factored into the store opening models of McDonald's, Wendy's, and Subway. Deportations and voluntary departures have removed nearly 3 million customers from the market, causing the model to collapse before the profit margins. The mentions of Jack in the Box and Wingstop regarding the withdrawal of Latino customers indicate that the impact is on the customer base, not just on kitchen labor.
The capital path shows that store closures are happening before price increases. Franchisees are borrowing based on old customer traffic, and after net immigration turns negative, new store returns are insufficient to cover rent and labor costs. McDonald's slowing its store openings and Wendy's and Subway closing hundreds of locations reflect a shift from macro population numbers to store-level adjustments. Funds are retreating from development capital expenditures back to maintaining existing stores, and growth premiums are being extracted from chain stocks.
A similar situation occurred with Japanese convenience stores stopping their old grid expansion after declining birth rates, and European low-cost airlines cutting marginal routes in markets with decreased net immigration. Fast food is currently in a 'more stores than customers' digestion phase, not just a temporary discount war. The recent recovery due to lower gasoline prices cannot mask Brookings' prediction of continued net outmigration in 2026.
Structurally, this represents a transfer of pricing power. The mechanism is that fast food pricing power is built on the premise of 'more mouths each year,' and net outmigration returns pricing power from brands back to the remaining consumers—fewer people means harsher discounts, slower store openings, and earlier closures. Labor shortages and customer base losses are both tied to the same immigration chain, putting pressure on both the cost and demand sides.
ABAB News · Cognitive Laws
- Fewer people means fewer fast food orders.
- Store opening models die from net outmigration, not from hamburger prices.
- Customer bases being removed means discounts cannot restore density.