Consumers across the United States are changing how they spend money. Rising inflation, higher costs, and economic uncertainty are causing many people to be more careful with their purchases. This change is especially clear in how Americans spend on snacks and dining out. Many are choosing value and necessity over impulse buys or indulgence.
Data shows people are shopping less often, looking harder for discounts, and cutting back on impulse purchases at checkout. Shoppers are avoiding premium or expensive products and switching to cheaper, store-brand items. Cooking at home is also becoming more popular, since grocery prices have risen more slowly (1.6% over the past year) than restaurant prices (3.6% over the same time).
This pullback in spending is affecting businesses in many sectors. Leading snack companies like Campbell’s, PepsiCo, Kraft Heinz, and Calenova have reported lower sales and volumes. Campbell’s CEO noted that consumers continue to cook at home and focus on products that help stretch their food budgets. He added that people are becoming more careful about their discretionary snack purchases.
Even fast food, which usually holds up well during economic downturns, is facing challenges. McDonald’s recently reported a 1% drop in global sales and a 3.6% fall in U.S. sales in the first quarter. This is the biggest quarterly decline in the U.S. since the 2020 COVID lockdowns. The drop is mainly due to fewer customers visiting the stores.
McDonald’s CEO Chris Kempczinski said the company is dealing with the “toughest of market conditions.” He explained that many lower- and middle-income customers cut back on fast food during the January to March period. McDonald’s saw customer traffic drop more than expected.
Price increases are another factor. Many customers complain online that McDonald’s meals can now cost as much as dining at casual restaurants. The price of a cheeseburger, for example, rose 55% from $1.55 in 2021 to $2.40 in 2024. McDonald’s says these increases reflect higher costs for labor and ingredients. But the perception that fast food is affordable is changing.
To attract customers, McDonald’s is focusing on value deals. Its $5 Meal Deal, which includes a McDouble or McChicken, small fries, four Chicken McNuggets, and a small drink, has been extended through 2025. Kempczinski said this deal is popular with customers.
McDonald’s also introduced a McValue menu, where customers can buy one item for $1 when purchasing another full-priced item. However, this offer has not boosted sales as much as expected. Despite this, McDonald’s plans to keep promoting value deals throughout 2025.
Other fast food chains are also feeling pressure. KFC and Pizza Hut reported sales declines, and Chipotle saw weaker sales in the first quarter. Overall fast food visits dropped nearly 2% through October. Experts say this is mainly due to low-income customers making tough choices, sometimes skipping side items like fries or cooking at home instead.
While burger chains such as McDonald’s, Wendy’s, and Burger King had a weak year and lost market share, chicken-focused chains like Chick-fil-A, Raising Cane’s, and Wingstop are doing well. Stable chicken prices and its image as a healthier choice seem to be helping these brands.
Taco Bell is also performing strongly. The chain reports steady same-store sales growth. It benefits from a reputation for value and strong brand appeal across income groups. This shows how important it is for fast food brands to offer affordability and stay relevant today.
Economic uncertainty is another challenge. Changes in tariff policies have shaken consumer confidence. For example, General Motors cut its 2025 profit forecast partly due to tariff-related costs. The threat of a trade war helped push U.S. consumer sentiment down 32% between January and April, reaching its lowest level since 1990. The U.S. economy shrank 0.3% in the first quarter, adding to the tough outlook for businesses that depend on consumer spending.
For fast food chains like McDonald’s, success in this difficult market will depend on adapting to changing consumer habits. Competing on price is not enough; they must clearly show value to budget-conscious customers. How well they respond to these challenges will decide who thrives in this unpredictable economy.
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