Customers in the USA are hitting their financial limits, and some of the country's most well-known food brands are feeling the impact. Despite the slowdown in food inflation at supermarkets and restaurants, the prices for products from hamburgers to mayonnaise are still significantly higher than before the pandemic. Fast-food prices in March were 33% above the 2019 level, while retail food prices have risen by 26%.
The Decline in Sales Affects Both Fast Food Chains and Packaged Food Manufacturers. Kraft Heinz and Mondelez International, known for their snack products, report declining sales and pressure on demand due to higher prices and reduced grocery brands in the USA. Kellanova, the maker of Pringles and Pop-Tarts, also reported a 5% decline in sales volume following price increases of the same extent.
Restaurants and food manufacturers must adjust their strategies due to changed consumer behavior. McDonald's and Starbucks plan to offer more promotions and communicate them more clearly. Mondelez intends to offer special prices and smaller package sizes, and Kraft Heinz plans to introduce new Mac & Cheese products.
Some restaurant chains like Domino's Pizza and Cava choose to keep their prices stable to gain a larger market share, even if this could affect profit margins. For example, Domino's has maintained its national Mix-and-Match deal at $6.99 since 2022, which has helped the company gain market share from competitors.
The efforts of food companies to mitigate price pressure are also reflected in new product offerings and timing strategies for promotions that aim to capitalize on consumers' purchasing power at different times of the month. For the first time, Starbucks will make offers previously exclusive to loyalty program members available to all customers in order to emphasize the value of its products.
These developments show that companies are reacting quickly to the changing consumer behavior and are trying to adjust their offers accordingly to maintain the loyalty of their customers in a challenging economic environment.
