How Fast Food and Beverage Giants Are Adapting to Increasing Income Inequality Among Customers

The U.S. economy is diverging. While some people continue to spend freely, many Americans are feeling the pinch. This growing divide matters—especially for businesses that rely on consumer spending.

Take McDonald’s, for instance. CEO Chris Kempczinski said the fast-food giant noticed a sharp decline in visits from lower-income consumers. To respond, they reinstated their “Extra Value Meal” combos. Coca-Cola’s COO, Henrique Braun, echoed similar concerns, noting that spending differences among income groups continue to widen.

### A K-Shaped Economy

The U.S. economy has been evolving into a “K” shape for decades. As wealth concentrates at the top, the rest face increasing struggles. In 1989, the top 10% controlled about 61% of total wealth. Now, it’s around 67%. This growing inequality has ebbed and flowed, with alarming spikes during crises like the COVID-19 pandemic. The stock market bounced back quickly, while many sectors stayed shut down.

Three years later, the economic landscape shows signs of a repeat. Current wage growth barely outpaces inflation. Workers earning hourly wages are particularly hit, lagging behind their salaried counterparts, as shown by data from the Atlanta Federal Reserve.

Peter Boockvar from OnePoint BFG Wealth Partners said, “High-income households are thriving while lower-income consumers are struggling.” This means many people are either standing still or falling behind.

### Consumer Behavior Splits

This divide is evident in how people are spending. Recently, many companies reported a two-tiered economy. Chipotle’s CEO, Scott Boatwright, observed a decrease in visits, especially among those in the lower-income bracket. He noted that younger adults face barriers such as diminishing job opportunities, student loan repayments, and slow wage growth.

It’s not just fast food. Mondelez, a snack company, experienced a downturn due to cost-conscious consumers opting for discount brands. Their CEO pointed out that higher-income shoppers prefer premium products that many of Mondelez’s regular offerings cannot compete with.

### Washington’s Concern

This disparity has gained attention from the Federal Reserve. Chair Jerome Powell highlighted how lower-income consumers are spending less and turning to cheaper products. Meanwhile, the wealthiest consumers remain “price insensitive,” absorbing higher costs without changing their habits.

Tariffs imposed by previous administrations also add to the divide. Federal Reserve governor Christopher Waller noted that these tariffs could be hurting lower-income shoppers more, driving them to seek out less expensive alternatives.

### Sustained Spending from the Wealthy

Interestingly, as lower-income individuals cut back, spending among wealthier households helps sustain the economy. The top 10% is responsible for about half of all consumer spending, according to Moody’s Analytics. American Express recently reported that its high-income cardholders upped their spending by 8%.

Luxury brands and high-end products are flourishing. For instance, Delta Air Lines anticipates that premium seat sales will outpace standard seats for the first time. Ford and GM are enjoying booming sales of their larger, more expensive vehicles.

### The Bigger Picture

Looking at spending alone might not give a full picture of the U.S. economy, according to Chris Wheat from JPMorganChase & Co. He emphasized that more households are investing in the stock market now than a decade ago—five times more lower-income households are transferring funds to investment accounts compared to 2010-2015 reports.

However, even wealthier households are facing challenges. Credit delinquencies for those earning over $150,000 have doubled since 2023. Notably, the number of high-income jobs being created has fallen to its lowest rate since 2015. This suggests that simply having a high salary doesn’t ensure financial security—asset ownership is increasingly critical.

As Rikard Bandebo from VantageScore pointed out, the divide isn’t just about income; it’s about accumulated wealth. “The economy shows more individuals struggling—even those in higher income brackets,” Bandebo stated.

In essence, the economic landscape has never been more complex, reflecting deepening divides across income levels. Understanding these shifts can help illuminate the future of consumer behavior, spending habits, and overall economic health.



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