Global fast food giants may have to dole out steeper promotions to lure inflation-hit customers who are increasingly opting to eat at home, following weak sales from the likes of McDonald's and Starbucks this week. Disposable income in the United States is declining, particularly in the lower-income cohort, while the slow economic recovery in China has increased industry-wide pressures for quick-service chains including KFC owner Yum Brands that has extended across several quarters.
Packaged food companies are also feeling the pinch of weak consumer spending, especially from low-income households, as their cookies and baked snacks see a slowdown in sales. China's weakness is also taking a toll. Coffee chain Starbucks expects full-year comparable sales globally to come in between flat and a low single-digit gain, lowering its previous guidance, with CEO Laxman Narasimhan saying that customers had made the trade-off "between food away from home and food at home."
The U.S. consumer confidence index fell for the third consecutive month in April, according to a survey conducted by research group The Conference Board, which found that the first place Americans are looking to save money is on meals away from home.
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