McDonald’s And Chipotle Join Walmart And Target In Feeling The Pain Of Inflation, Lack Of Stimulus Checks

August 2, 2022

McDonald’s and Chipotle have joined Walmart and Target in feeling the pain of soaring inflation that has been crushing the family budgets of low- and middle-income Americans and the lack of stimulus checks to deal with the situation.

Last week, McDonald’s reported solid international sales for the second quarter of 2022 but lackluster U.S. sales. They increased 3.7% in the second quarter of 2022, down from 25.9% in the corresponding quarter of 2021. That compares with a 13% rise in international sales in the second quarter of 2022 and 75.1% in the corresponding quarter of 2021. When these figures are adjusted for inflation, second quarter revenues from U.S. operations decreased rather than increased from a year earlier.

Chipotle fared better than McDonald’s, but that’s thanks to price hikes, which create perception risks for the brand. “Our view is that the confluence of aggressive pricing action (aimed at preserving a margin structure, rather than providing value to the customer) and a more difficult economic climate risk provoking a change in the price perception for the brand and the trajectory of transactions,” Quo Vadis president John Zolidis said in a note to his subscribers.

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