US Consumers Trading Down: McDonald's, Starbucks, and Other Major Brands Report Inflation Impact on Sales

United States of America
Amazon CFO Brian Olsavsky mentioned that customers are trading down and looking for deals.
Disposable income declines, particularly among lower-income individuals, have put pressure on quick-service chains such as KFC owner Yum Brands for several quarters.
Inflation is impacting consumers, with major brands like McDonald's and Starbucks reporting a decline in sales due to the squeeze on low-income individuals.
McDonald's CFO Ian Borden noted that consumers have become sensitive to price, resulting in moderating check growth.
Starbucks sales declined 3% in the US year on year.
US Consumers Trading Down: McDonald's, Starbucks, and Other Major Brands Report Inflation Impact on Sales

Inflation continues to impact consumers, with major corporations such as McDonald's and Starbucks reporting a squeeze on low-income individuals. According to recent reports, Amazon CFO Brian Olsavsky mentioned that customers are trading down and looking for deals, while Starbucks sales declined 3% in the US year on year. McDonald's CFO Ian Borden also noted that consumers have become sensitive to price, resulting in moderating check growth. These trends indicate a cautious approach to spending among US consumers.

The impact of inflation is not limited to the food industry. Disposable income declines, particularly in the lower-income cohort, have put pressure on quick-service chains such as KFC owner Yum Brands for several quarters. Menu prices have risen across industries to mitigate higher commodity and supply chain costs, but this has hurt demand and boosted consumers' desire to eat at home.

Packaged food companies are also feeling the pinch of weak consumer spending, especially from low-income households. Mondelez CFO Luca Zaramella noted that brands with higher penetration among lower-income households, such as Chips Ahoy!, have seen a slowdown in sales.

Starbucks CEO Laxman Narasimhan expects full-year comparable sales globally to come in between flat and a low single-digit gain. McDonald's, which has a higher exposure to the lower-income cohort, saw global sales decline for the fourth straight quarter and is leaning on improving offers on its meals.

Despite these challenges, some companies have managed to thrive. Domino's Pizza and Burger King owner Restaurant Brands reported a sales boost in the most recent quarter due to their loyalty programs and higher promotions. Shares of Domino's Pizza have gained 27% year-to-date, while those of Restaurant Brands and McDonald's are down 6% and 8%, respectively.

The cautious spending trend among US consumers is expected to continue as they seek value in their purchases. The U.S. consumer confidence index fell for the third consecutive month in April, with 44.8% of those surveyed planning to cut back on food away from home to save money.


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Confidence

90%

Doubts
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Sources

98%

The overall score is a weighted number that takes into account conflict of interest, bias, deception and other practices that undermine the credibility of the source. It is calculated as:
(Site Conflicts Of Interest + Author Conflicts Of Interest) / 2.0 * 0.2 + ArticleBiasScore * 0.20 + UniquePointsScore * 0.05 + DeceptionScore * 0.20 + ReadabilityScore * 0.05 + FallacyScore * 0.20

A score that takes into consideration the content for flow, interruptions with ads, and overt search engine optimization techniques that makes the content hard to understand

McDonald's and other big brands warn that low-income consumers are starting to crack

CNBC News Alex Harring Tuesday, 30 April 2024 16:20
  • Unique Points
    • McDonald’s and other corporations are reporting that consumers are being impacted by inflation.
    • ,
  • Accuracy
    • Consumer confidence hit its lowest level since mid-2022 due to high prices.
    • Worker pay has risen but so have consumer prices, reducing the impact of higher wages.
    • The rate of inflation has fallen significantly but remains above the Federal Reserve’s goal.
    • McDonald’s same-store sales growth came in below Wall Street expectations due to affordability concerns for low-income consumers.
    • 3M is experiencing continued softness in consumer discretionary spend and anticipates muted consumer spending this year.
    • Newell Brands expects revenue to decline due to inflation outpacing wage growth and consumers carefully managing their discretionary spend.
    • Colgate-Palmolive has seen volume growth return as inflation becomes more benign, but Coca-Cola has noted an emphasis on value among American consumers.
  • Deception (100%)
    None Found At Time Of Publication
  • Fallacies (100%)
    None Found At Time Of Publication
  • Bias (100%)
    None Found At Time Of Publication
  • Site Conflicts Of Interest (100%)
    None Found At Time Of Publication
  • Author Conflicts Of Interest (100%)
    None Found At Time Of Publication

97%

The overall score is a weighted number that takes into account conflict of interest, bias, deception and other practices that undermine the credibility of the source. It is calculated as:
(Site Conflicts Of Interest + Author Conflicts Of Interest) / 2.0 * 0.2 + ArticleBiasScore * 0.20 + UniquePointsScore * 0.05 + DeceptionScore * 0.20 + ReadabilityScore * 0.05 + FallacyScore * 0.20

A score that takes into consideration the content for flow, interruptions with ads, and overt search engine optimization techniques that makes the content hard to understand

US fast-food chains may have to amp up promotions as more people eat at home

Yahoo Finance Savyata Wednesday, 01 May 2024 21:42
  • Unique Points
    • Disposable income decline is particularly significant in the lower-income cohort.
    • Industry-wide pressures on quick-service chains, including KFC owner Yum Brands, have persisted for several quarters.
  • Accuracy
    • Global fast food chains may need to offer steeper promotions due to declining disposable income and increased consumer preference for eating at home.
    • Menu prices have risen across the industry due to higher commodity and supply chain costs.
    • Packaged food companies are experiencing weak sales, especially among lower-income households.
    • Starbucks expects full-year comparable sales to be between flat and a low single-digit gain, down from previous guidance.
    • McDonald’s global sales declined for the fourth straight quarter and is focusing on improving meal offers.
    • U.S. consumer confidence index fell for the third consecutive month in April, with respondents planning to cut back on meals away from home to save money.
  • Deception (100%)
    None Found At Time Of Publication
  • Fallacies (100%)
    None Found At Time Of Publication
  • Bias (100%)
    None Found At Time Of Publication
  • Site Conflicts Of Interest (100%)
    None Found At Time Of Publication
  • Author Conflicts Of Interest (100%)
    None Found At Time Of Publication

98%

The overall score is a weighted number that takes into account conflict of interest, bias, deception and other practices that undermine the credibility of the source. It is calculated as:
(Site Conflicts Of Interest + Author Conflicts Of Interest) / 2.0 * 0.2 + ArticleBiasScore * 0.20 + UniquePointsScore * 0.05 + DeceptionScore * 0.20 + ReadabilityScore * 0.05 + FallacyScore * 0.20

A score that takes into consideration the content for flow, interruptions with ads, and overt search engine optimization techniques that makes the content hard to understand

Amazon, McDonald's show just how cautious consumers are about spending

Business Insider Kwan Wei Wednesday, 01 May 2024 21:43
  • Unique Points
    • Amazon CFO Brian Olsavsky mentioned customers were trading down and looking for deals, buying 'a lot more consumables and everyday essentials'.
    • Starbucks sales declined 3% in the US year on year.
    • McDonald's CFO Ian Borden mentioned consumers have become sensitive to price, resulting in moderating check growth.
  • Accuracy
    • Amazon customers were trading down and looking for deals, buying 'a lot more consumables and everyday essentials'
    • , Starbucks sales declined 3% in the US year on year.
    • , McDonald’s diners were focusing on value with comparable US sales up 2.5% year-over-year.
    • , McDonald’s CFO mentioned consumers have become sensitive to price, resulting in moderating check growth.
  • Deception (100%)
    None Found At Time Of Publication
  • Fallacies (100%)
    None Found At Time Of Publication
  • Bias (100%)
    None Found At Time Of Publication
  • Site Conflicts Of Interest (100%)
    None Found At Time Of Publication
  • Author Conflicts Of Interest (100%)
    None Found At Time Of Publication