Recently, some major US companies have been experiencing poor sales, causing them a great deal of headache. Both McDonald’s and Starbucks have seen a decline in sales, fewer people are booking Airbnbs, and families are visiting Disneyland less frequently.
However, the US economy remains relatively strong, with an annualized growth rate close to 3% in the latest quarter. Although the pace of job creation is slowing down and the July unemployment rate increased faster than expected, compared to before the pandemic, the US has added 6 million jobs and wages have grown faster than inflation.
McDonald’s reported a 0.7% drop in sales in the US compared to the same period in 2023, with sales performance remaining weak in the second quarter. While data shows that Americans are indeed visiting McDonald’s and Starbucks less, it doesn’t mean they are avoiding dining out altogether, but rather seeking better value for their money.
With McDonald’s continuously raising prices, many people are hesitant to pay unconditionally, leading consumers to explore other options.
According to CNN reports, people are more inclined to dine at Texas Roadhouse, where they can sit down and enjoy a meal service. Sales at Texas Roadhouse increased significantly by 9.3% in the last quarter. Alternatively, they may choose Chipotle, whose sales surged by 11% in the previous quarter.
Furthermore, the demand for budget travel has weakened compared to the months following the easing of the pandemic, where there was a surge in “revenge travel”. During the “revenge travel” period, Americans had sufficient savings to travel, but now that savings are largely depleted, the enthusiasm for travel has waned.
Airbnb’s second-quarter earnings fell short of expectations, and the company anticipates facing more challenges in the future, with Airbnb’s stock price dropping over 13% on Wednesday.
However, the high-spending leisure travel industry seems to be continuing to grow. Mark Hoplamazian, CEO of Hyatt Hotels, stated that Hyatt’s performance growth rate is significantly higher than pre-pandemic levels without signs of consumers reducing leisure travel. Marriott Hotels exceeded second-quarter expectations, with its CEO expecting strong demand to continue.
Disney’s theme park business surprisingly showed signs of weakness. Disney CFO Hugh Johnston stated, “Low-income consumers feel pressure (from ticket prices), while high-income consumers are traveling abroad.”
According to CNN, visitors and travel agencies have expressed that Disney’s pricing is overwhelming, with various amusement park package options being complex. Additionally, for years fans have complained about the high prices of theme park tickets, which remains a major issue.
Overall, domestic consumption in the US remains robust, with consumers still willing to spend money. However, there is a trend towards consumer stratification emerging. Lower-income consumers may be starting to reduce non-essential spending, while higher-income consumers are seeking more unique and cost-effective experiences, which is challenging the business strategies of established companies in the US.