From Big Macs to Kraft mac… Americans aren’t giving up their comfort-food staples. Big food companies have crushed earnings expectations as consumers keep paying up to eat up, despite significant price hikes. It’s a theme:
McDonald’s beat estimates as US traffic grew for the third straight quarter, amid higher McMenu prices and inflated nuggets. Global same-store sales grew 13%.
Chipotle saw stronger-than-expected traffic and sales growth, while the burrito legend’s prices are up 10% from a year ago (guac = extra extra).
Nestlé, the world's largest food company, also grew sales after hiking prices by about 10% as folks kept grabbing its Kit Kats, Hot Pockets, and "Nes" products (’presso, ’café, ’quik).
Pepsi lifted its annual sales forecast as demand for products like Gatorade, Cheetos, and Doritos stayed strong — after it raised prices by 13%.
Coke had bubbly results, too, as higher prices and rising demand fueled its bev sales.
I’ve got the (pricing) power… Pricing power = how much companies can raise prices without hurting demand. Food companies are flexing that power by showing that consumers are willing to pay more for their goodies, from brand-name sodas like Coke to affordable splurges like Egg McMuffins. Even during economic downturns, people tend to hold on to these little treats.
Pricing power has its limits… because budgets can stretch only so far. McD’s said that diners in some markets have pushed back more than anticipated against higher prices, and customers are ordering fewer items. Coke noted signs of shifting buying habits, and said it plans to slow price hikes this year. As US retail spending dips, corporate price bumps could flatten.