As economic indicators go, recent results from McDonald’s (MCD), Chipotle Mexican Grill (CMG), and Starbucks (SBUX) are worth paying attention to–and the message the three consumer giants are sending isn’t a positive one for the U.S. economy.
Listen to McDonald’s CFO McDonald’s CFO Ian Borden talking to analysts on Thursday morning after the company’s first quarter earnings results missed Wall Street estimates. “The big thing is people are just visiting less and that speaks to, I think, the pressure on consumers.”
In the U.S., McDonald’s 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.”
That echoes what Chipotle CEO Scott Boatwright said during the company’s earnings call in April. Chipotle saw quarterly same-store sales decline for the first time since COVID-19 shut down stores in 2020.
Boatwright said last week, the Wall Street Journal reported, 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.”
Coffee giant Starbucks recently saw U.S. comparable store sales from stores open for more than a year fall for the fifth consecutive quarter.
The restaurant trends are consistent with recent Bank of America’s credit card data showing that spending on “nice-to-have” discretionary services, such as dining out, going to the movies, or travel and leisure spending, eased in March.
