Consumers are feeling the pressure from years of price hikes, which is putting some of America's favorite brands and chains in a tough spot. According to a Wall Street Journal report, chains like Starbucks, Wendy's, and McDonald's are seeing a decline in consumers as costs remain high.
David Tawil, president of Prochain Capital, echoed this sentiment, stating, "We're seeing the consumer under a considerable amount of pressure." He noted the rise in credit card delinquencies and the struggles of middle-market companies.
"We're seeing companies that I'd say are in the middle market, of discretionary spending starting to go ahead and show considerable weakness," Tawil continued. He cited examples like rue21 and Sam Ash, the 100-year-old musical instrument retailer, which are closing their doors.
"Rue21 filed for Chapter 11 bankruptcy protection this month," Tawil explained, highlighting the challenges faced by once-popular mall staples. Meanwhile, Sam Ash announced the closure of its locations via Facebook.
Tawil predicted that bigger names like Red Lobster would also begin to feel the effects, with reports suggesting the restaurant chain may consider bankruptcy. The Wall Street Journal's report noted sliding sales or slowing growth in large restaurant chains and food manufacturers.
One California resident, Denis Montenaro, shared his frustration, saying, "I'm done with fast food." He cited the high cost of his favorite McDonald's breakfast order as the reason for his decision to stop purchasing.
Another former McDonald's customer from California expressed similar sentiments, stating, "The macro headwinds have been more significant than I think we even anticipated coming into the year." McDonald’s CFO Ian Borden acknowledged these challenges, noting significant macroeconomic headwinds.
In response to the cutbacks, some popular chains are planning new strategies and promotions to attract customers despite the challenging economic climate.