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Fast food chains have long warned that the financial situation of low-income consumers is deteriorating, and that many are turning to cheaper alternatives.
Starbucks blamed bad weather, while Yum Brands (parent company of Pizza Hut, KFC and Taco Bell) blamed January snowstorms and a strong first quarter last year. However, these reasons do not fully explain the decline in sales: competition is becoming more intense as consumers spend their money more consciously.
Everyone is struggling to keep or regain their less frequent customers, so we need to make sure we have a street fighter mentality to win.
said Ian Borden, McDonald's CFO.
Fast food chains plan to use different strategies to regain their sales. For example, McDonald's is preparing to offer a cheaper menu despite resistance from franchisees.
Chris Kempczinski, CEO of McDonald's, said there is caution in spending around the world at the moment, while Laxman Narasimhan, CEO of Starbucks, and David Gibbs, CEO of Yum, highlighted the importance of value to consumers and how their customers respond to it. .
Despite this decline, there were some fast food chains that reported positive results: Wingstop reported a 21.6% increase in its US stores, while Chipotle Mexican Grill posted a 5.4% increase in sales in the first quarter. Restaurant Brands International's Popeyes brand posted a 5.7% increase in sales.
According to Michael Skipworth, CEO of Wingstop, although consumers are under pressure and therefore want to reduce their frequent visits to restaurants, in the case of Wingstop, it has been observed that low-income consumers return more often.
Cover image source: Getty Images
