Are consumers getting skittish?
Just ask McDonald’s (MCD), Chipotle (CMG), and Starbucks (SBUX). Those companies, in their latest earnings reports, signaled that their customers are in the midst of an economic squeeze.
“The big thing is people are just visiting less and that speaks to, I think, the pressure on consumers,” McDonald’s CFO Ian Borden told analysts on Thursday morning after the company’s first quarter earnings results missed Wall Street estimates in the face of drops in sales and traffic.
The big reason, it seems, is that President Trump’s tariff policy — and the flip-flopping that’s come with it — has caused uncertainty among spenders and has weighed on consumer sentiment, pushing inflation expectations to their highest levels since the 1980s.
McDonald’s pointed to traffic trends at quick-service restaurants by income level, showing the squeeze on consumers may be broadening.
In the US, low-income consumer traffic was down “nearly double digits versus the prior year quarter,” according to CEO Chris Kempczinski. “Unlike a few months ago, [quick-service restaurant] traffic from middle-income consumers fell nearly as much, a clear indication that the economic pressure on traffic has broadened.”
The impact isn’t just on value-chain restaurants. Chipotle CEO Scott Boatwright cited a slowdown in consumer spending during the company’s earnings call in April as the Mexican-style food chain saw quarterly same-store sales decline for the first time since COVID-19 shut down stores in 2020.
Boatwright said last week, per the Wall Street Journal, that the burrito chain “began to see an elevated level of uncertainty” in February in which “saving money because of concerns around the economy was the overwhelming reason consumers were reducing the frequency of restaurant visits.”
He added in the earnings call, “We could see this in our visitation study, where saving money because of concerns around the economy was the overwhelming reason consumers were reducing the frequency of restaurant visits. This drove a slowdown in our underlying transaction trends; this trend has continued into April.”
The restaurant trends are consistent with recent Bank of America’s credit card research showing that “nice-to-have” discretionary services, such as dining out, going to the movies, or travel and leisure spending, eased in March.
Meanwhile, coffee giant Starbucks (SBUX) recently saw US comparable store sales — a closely watched metric that includes results from stores open for more than a year — fall for the fifth consecutive quarter.
