People need to eat, but what they eat depends a lot on their budget.
Executives from lower-priced chains, including McDonald’s and Dollar General, have commented on how they are seeing sales growth with higher-income customers.
“We’re pleased to see growth once again in our total customer count, with disproportionate growth coming from higher-income households. We remain focused on executing our proven playbook to retain a substantial portion of these customers. And with our unique combination of value and convenience, we believe we are well-positioned to increase market share with customers across all income brackets,” said Dollar General CEO Todd Vasos during his company’s third-quarter earnings call.
McDonald’s saw an increase in U.S. same-store sales of 2.5% in its second quarter, which was also driven by higher-income customers.
“Certainly, overall QSR traffic in the U.S. remained challenging as visits across the industry by low-income consumers once again declined by double digits versus the prior year period. Reengaging the low-income consumer is critical as they typically visit our restaurants more frequently than middle- and high-income consumers,” McDonald’s CEO Christopher J. Kempczinski shared during his company’s Q2 earnings call.
When consumers trade down, they’re taking their dollars from wherever they usually shopped. That’s not good news for traditional grocery chains like Kroger.
Interim Kroger CEO Ronal Sargent has seen some of his company’s customers shop more hesitantly.
“As you’ve been reading, consumer sentiment has declined a lot over the last 4 months. And there are a lot of reasons behind that, whether it’s a slowing job market or the government shutdown, the SNAP benefits, concern about inflation, and categories like beef, coffee, and chocolate,” he said.
People, he noted, have not stopped visiting, but their behaviors have changed.
“I just think customers are managing their budgets carefully. And they’re making more trips. They’re making smaller trips. The idea of stocking up is declining a bit,” he added.
That has not impacted every shopper.
“And we’re seeing this economy where high-income premium shoppers continue to spend, while lower-income customers are pulling back more aggressively,” Sargent said.
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Overall, however, he does see a trend.
“In terms of that middle bucket, I would guess, again, they’re also looking for value. And the best indicator of that is our Q3 was softer in the latter parts of the quarter because of the pause in SNAP benefits. So that would be kind of — I think going forward, I think the consumer is going to remain cautious. I think there’s going to be more focus on food items and less on discretionary categories,” he added.
Retail executives typically see this behavior early in earnings data, long before it shows up in government reports.
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Cautious spending due to inflation fears: 60% of shoppers say they are watching their spending more carefully as prices rise, Grocery Dive reported.
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Many consumers plan to buy fewer groceries: In a global survey, 65% said they’ll buy less food to offset rising costs, and 42% plan to shop at discount or wholesale stores, according to Retail Customer Experience.
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Widespread changes in shopping habits: A major EY index found 73% of U.S. consumers changed buying habits after price increases, prioritizing price and value in purchases, according to EY.
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Consumers seek value and deals: Survey data shows 42% shop sales or clearance racks, 40% stay within a strict budget, and 28% buy less overall because of inflation pressures, First Insight reported.
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Private-label and lower-cost options rising: About 36% of shoppers are “trading down” to cheaper alternatives as prices rise, increasing value-focused shopping, shared PYMNTS.com.
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High price frustration drives behavior: Nearly 88% of U.S. shoppers express frustration with high prices, with many stocking up on deals (41%), buying fewer items (37%), and using coupons/discounts (34%), according to Food Business News.
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Shoppers expect higher grocery bills: Most respondents in KPMG research anticipate spending about 8% more on groceries compared to last year, pushing many to tighten budgets, according to Grocery Dive.
Taken together, these surveys and studies confirm what grocery CEOs are already seeing in real-time sales data.
Albertson’s CEO Susan Morris sees some of the same behavior as her counterpart at Kroger.
“So what we’ve seen from the consumer is a continued focus on value. A shift to trading down, maybe it’s smaller package sizes, a focus on own brands, hence why we believe we have an incredible upside opportunity,” she shared during her chain’s second-quarter earnings call.
She has also noticed consumer being careful with their money in other ways.
“We see an increased usage of coupons. We see them sticking closer to their shopping list, maybe not buying that extra item, that extra bottle… they’re kind of shortening their list and sticking to it,” she added.
Mondelez International CEO Dirk Van de Put shared his thoughts on consumer spending with PTMNTS.com.
“They have no inclination to increase their spending,” Van de Put said. “They’re unsure about what’s going to happen, when those tariff effects really are going to hit them.”
Related: Consumer spending takes a record turn this holiday season
This story was originally published by TheStreet on Dec 14, 2025, where it first appeared in the Retail section. Add TheStreet as a Preferred Source by clicking here.