A recent CNN study of earnings calls and analyst notes finds that the word of the summer – on Wall Street, at least – is “bifurcation,” or the division of something into two parts. In this specific instance, bifurcation means that high-income consumers are plugging along just fine, while low-income consumers are really starting to struggle.
Indeed, 80% of American households have less cash available than they did in 2019, while credit card debt has reached a historic high. Meanwhile, a JP Morgan survey found that over 70% of low-income consumers are having a hard time making ends meet. Notably, middle-income households are also feeling pinched; 67% believe their income is falling behind the current cost of living.
Is it any wonder, then, that most (78%!) Americans now consider fast food to be a “luxury?” According to a new LendingTree survey, this shift in thinking has caused 62% of American consumers to eat QSR food less frequently. Don’t just take LendingTree’s word for it; traffic declines have been telling this story for at least two quarters now, while restaurant executives from McDonald’s to Jack in the Box to Dine Brands and Bloomin’ have pointed out a more discerning low-income consumer. This is of particular concern to the QSR segment, which overindexes on households below $50,000.