The suffering of “Main Street” and of the average American is, paradoxically, Wall Street which detects it best. Let’s look: Starbucks, the king of coffee, fell 16% on the stock market; Tyson Foods, that of beef, pork and chicken, by 9%; Yum, owner of KFC (Kentucky Fried Chicken) recorded a decline of 6%. When these unsinkable multinationals announced the results for the first quarter of 2024, it was a cold shower on Wall Street.
Explanation: the American consumer, exhausted by cumulative inflation which has reached 20% since Joe Biden came to power, is starting to tighten his belt. Certainly, these companies are suffering from stagnation in China, the strength of the dollar and the war in the Middle East, but for the first time since the Covid-19 crisis, consumption seems to be stalling in the United States.
The bosses of the companies concerned were unanimous when presenting their results to financial analysts. “The consumer is under pressure, particularly low-income households,” said Melanie Boulden, ready meals manager at Tyson Foods, on Monday, May 6. “Cumulative inflation of 20% over the last three years” contributed, according to her, to creating a “more cautious and price-sensitive consumer”. Same feeling expressed by Chris Kempczinski, CEO of McDonald’s, who also detects general caution. “This may be more pronounced among lower-income consumers, but it is important to recognize that all income groups want value for money,” estimated the boss of the fast food leader.
An exceptional setback
As a result, these giants are experiencing an exceptional decline in their turnover. At Starbucks, the situation is frankly bad with sales per point of sale down 4%: “Our performance this quarter was disappointing and did not meet our expectations”, confirmed CEO Laxman Narasimhan. KFC saw its turnover fall by 2% while analysts expected an increase.
Even marketing giant Procter & Gamble, owner of Pampers diapers and Gillette razors, recognizes “headwinds”, with an increase in sales of 3%, lower than expectations. The famous Kraft Heinz ketchup is also affected, with a drop in sales volumes, attributed in particular to the end of the food programs decided during the Covid epidemic and the decline in sales to restaurants.
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