In January, economists warned that customers would spend less at places like fast food chains as rising inflation drives up the prices of necessities — and earnings reports released this week show those predictions might have come true.
McDonald’s, Starbucks, Pizza Hut, and KFC all reported lower-than-expected sales this week.
“Clearly everybody’s fighting for fewer consumers or consumers that are certainly visiting less frequently, and we’ve got to make sure we’ve got that street-fighting mentality to win, [regardless] of the context around us,” McDonald’s CFO Ian Borden said on the company’s earnings call on Tuesday.
Related: McDonald’s CFO Says the Company Is Testing Bigger Burgers in ‘Select’ Markets This Year — Here’s Why
The McDonald’s logo. (Photo by Paul Weaver/SOPA Images/LightRocket via Getty Images)
McDonald’s saw same-store sales grow 2.5% in the U.S. last quarter, from January through March, which was slightly below expectations of 2.55% growth and much lower than the fast food chain’s 12.6% growth in the same period last year.
Related: McDonald’s CEO Says That ‘Affordability’ Is on the Way as Company Struggles Through Sales Slump
The other companies all reported declines in the same category. Same-store sales at Starbucks dropped 3% in the U.S., its first decline in that category in almost three years, while Pizza Hut and KFC saw 7% and 2% same-store declines, respectively.
The earnings reports were weaker than analysts expected, which may be due to inflation and higher prices. McDonald’s raised menu prices by 10% last year.
A Restaurant Business analysis of McDonald’s items across all 50 states shows that the average price of a McDonald’s cheeseburger jumped 55% in the past three years.
“Eating at home has become more affordable,” McDonald’s CEO Chris Kempczinski said on an earlier February earnings call.
Related: McDonald’s Made a Simple Change to a Cult-Favorite Menu Item. Now, the Sandwich Is a $1 Billion Brand.
Data from a recent consumer price index report backs up Kempczinski’s statement. The report showed that prices for goods in the “food at home” category rose 1.2% in the past year, while food prices away from home rose 4.2% over the same period.
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