Fox Business Charles Payne host gives her point of view on the feeling of American consumers and the Wall Street’s reaction to President Donald Trump’s pricing strategy on the “ money ”.
McDonald’s global comparable sales experienced a decrease in the first quarter while consumers, weighed down by economic uncertainty, bought less fast food.
The company said its world comparable sales fell 1% from one year to the other in the first quarter, its sales comparable to the United States, seeing a decrease of 3.6%.
Analysts provided for an increase of 0.95% for the first and a drop of 0.5% for the second.
Customers are seen to leave a McDonald’s in Hong Kong. (Sébastian NG / SOPA Images / Lightrochets via / Gettty Images)
The results echo the warnings of Domino’s Pizza restaurant operators, Chipotle Mexican Grill and Starbucks that Americans spent less for dinner as inflation and a dark economic perspective of consumer confidence.
Consumer confidence plunged to a hollow of 5 years in April
The Trump administration’s pricing rates have aggravated the portfolio pressures and disrupted companies, threatening to increase costs and overthrow the supply chains.
The US economy is in trouble, the latest data showing that it has first contracted in three years in the first quarter, increasing the chances of recession.
Analyst Emarketer Sky Canaves told Reuters that “less affluent consumers are the most vulnerable to the impact of inflation, and one of the first areas where they will cut back”.
| Teleprinter | Security | Last | Change | Change % |
|---|---|---|---|---|
| MCD | McDonald’s Corp. | 313.64 | -6.01 |
-1.88% |
| Detach | Starbucks Corp. | 82.01 | +1.96 |
+ 2.45% |
| CMG | Chipotle Mexican Grill inc. | 50.33 | -0.16 |
-0.32% |
| DPZ | Domino’s Pizza Inc. | 481.39 | -8.98 |
-1.83% |
During the company’s winning call, McDonald’s CEO Chris Kempczinki said that geopolitical tensions “added to economic uncertainty and consumers’ feeling more than what we expected in the first three months of the year.
McDonald’s “planned that the world’s world traffic in QSR industry would be down in the first quarter”, but it decreased “more than what we plan” in America and “several” large markets, he said.
In the United States, Kempczinski said that traffic in the low-income consumer industry “was almost two-digit broken down” and that traffic in medium-fired fast-income eaters “fell almost as much”.
“However, the growth in high-income cohort traffic remains solid, illustrating the divided American economy, where consumers with low and average income in particular are weighed down by the cumulative impact of inflation and increased anxiety about economic prospects,” he said.
Kempczinski said he believed that McDonald’s “can resist these difficult conditions better than most” and “expect to surpass our competitors by exploiting the strength of our brand and the power of our global scale”.
The value and affordability are “essential in an environment like this,” he said, adding that the company also focuses on new food innovations and marketing to attract consumers.
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The $ 5 meal agreement of the company will remain on the menu in the rest of the year as part of its value menu offers, said the financial director Ian Borden to analysts and investors.
At the end of April, the leaders of Chipotle, another fast food chain, also noted that a “slowdown in consumer spending” had presented a wind from the first quarter because it declared its own quarterly financial results.
A chipotle restaurant in New York on July 11, 2023. (Jeenah Moon / Bloomberg via / Getty Images)
“In February, we started to see that the high level of uncertainty felt by consumers starting to have an impact on their spending habits,” said CEO Scott Boatwright. “We were able to see this in our study of visits where to save money due to concerns concerning the economy was the overwhelming reason why consumers reduced the frequency of visits to the restaurant.”
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He said it contributed to a slowdown in the company’s “underlying transactions” and continued in April.
Sales of comparable chipotle restaurants experienced a 0.4% drop in the first quarter.
Reuters contributed to this report.
