Amazon, Starbucks, McDonald's show how jittery US customers are about the economy

• Amazon, Starbucks, and McDonald's executives say US consumers have been tightening their belts.
• Amazon CFO Brian Olsavsky said customers were trading down and looking for deals.

US consumers are becoming more prudent with their spending, executives at Amazon, Starbucks, and McDonald's all said this week.

"Customers in the US are being very thoughtful about their spend," Amazon CFO Brian Olsavsky told journalists ahead of the company's earnings call on Tuesday. "They look for deals, they trade down and look for lower ASP (average sale price) products."

Olsavsky said customers were buying "a lot more consumables and everyday essentials," which tend to be cheaper.

Starbucks CEO Laxman Narasimhan made a similar observation during his company's earnings call, also on Tuesday.

"We continue to feel the impact of a more cautious consumer, particularly with our more occasional customer," Narasimhan said, noting that it had affected traffic and sales across the industry.

Executives from McDonald's, Domino's, and Restaurant Brands International — Burger King's parent company— made similar remarks during earnings calls this week.

"Many customers are being more exacting about where and how they choose to spend their money, particularly with stimulus savings mostly spent," Narasimhan said, adding that some customers had been saving money by eating more at home.

The CEO said Starbucks' performance this quarter "did not meet our expectations." Sales declined 3% in the US year on year.

William Blair analyst Sharon Zackfia said in a note to clients that it was "the weakest traffic performance at Starbucks outside the pandemic or the Great Recession."

On Tuesday, McDonald's execs told investors that diners were overwhelmingly focusing on value. Comparable US sales were up 2.5% year-over-year in the first quarter, compared to 12.6% for the same period in 2023.

"The consumer is price weary," McDonald's CFO Ian Borden said. "Everybody is fighting for fewer consumers or consumers that are certainly visiting less frequently."

"We've seen consumers become a bit more sensitive to price, resulting in moderating check growth," Joshua Kobza, the CEO of RBI, which owns brands including Burger King and Popeyes, told analysts on Tuesday.

Burger King's comparable US sales were up 3.9% in the most recent quarter year-over-year versus 8.7% during the same period in 2023.

The executives' remarks underscore the challenges facing US consumers — and the companies that sell to them — as shoppers attempt to stretch their dollars amid persistent inflation.

"From being a point of strength during 2023, it appears that lower- and middle-income households' spending growth has been softening," Bank of America economists wrote in a report published March 11.