Consumers Fed Up With Food Costs Are Ditching Big Brands [View all]

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https://www.wsj.com/business/consumers-fed-up-with-rising-food-costs-are-ditching-big-brands-4d314161

Consumers Fed Up With Food Costs Are Ditching Big Brands
After years of price increases, food companies say more consumers pull back; fast-food chains and snack makers plan new deals and flavors
By Heather Haddon and Jesse Newman
May 5, 2024 5:30 am ET

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For about three years following the Covid-19 pandemic, food companies pushed through a series of sharp price increases, saying they needed to recoup their own rising costs — and that consumers would adjust to stick with their favorite brands. As a result, the portion of U.S. consumers’ income spent on food has reached the highest level in three decades.

Now, some consumers are hitting their limits. Restaurant chains and some food manufacturers are reporting sliding sales or slowing growth that they attribute to consumers’ inability — or refusal — to pay prices that are in some cases a third higher than prepandemic times.

In Laguna Niguel, Calif., Denis Montenaro, said he recently headed to McDonald’s for a favorite order: bacon and egg bagel with a coffee. The 75-year-old retired manager was stunned to see the $9.67 bill.

“I’m done with fast food,” Montenaro said.

At Starbucks, U.S. traffic dropped 7% in the three months ended March 31, the steepest quarterly decline since at least 2010. Starbucks is losing occasional customers, executives said, and its active loyalty-rewards users declined by 1.5 million members from the end of the first quarter to the end of the second.

David Michael, a 58-year-old attorney from El Dorado Hills, Calif., said he used to get McDonald’s at least weekly but stopped a few months ago now that some sodas cost $1.69 instead of a dollar, and his regular meal of a small burger, fries and a Coke has climbed. He said he quit Starbucks after the price for a tall mocha climbed to $5.25.

“It’s not that I can’t afford it now,” Michael said. “It’s the frustration that the same meal now costs nearly double what it did.”

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