Consumers are tightening their belts—U.S. retail and food service industries can’t hold on any longer! They’re slashing prices and rolling out promotions.

“This year, global consumers have been hit by inflation—everyone is paying more for housing, food, and energy,” said Jon Abrahamsson Ring, CEO of IKEA. To stimulate demand, IKEA lowered product prices globally by approximately 10% this fiscal year—the largest annual price cut in the company’s history. He noted that by the end of 2023, 12 franchisees operating most IKEA stores reached a consensus to jointly reduce prices—a rare move for this furniture giant. “Many people have to spend more on other things, so we must offer them low-priced goods wherever possible,” he said. He also mentioned that, to offset rising costs, IKEA had raised prices across the board in the previous two years. This year’s price cuts attracted more customers to stores—but their spending per visit declined. On Thursday, the company announced its annual sales fell by 5.3%. Nike, meanwhile, cut prices for a different reason: to clear inventory, as sales pace lagged expectations. “The outlook for the remainder of this year will require us to launch more promotions,” said Matthew Friend, Nike’s CFO, on the analyst earnings call. Data shows Nike’s latest-quarter revenue dropped 10%, and profits fell 28% year-on-year—partly due to heavier-than-expected promotional activity eroding margins. Nike executives warned that sales this quarter could decline another 10%. Declining Foot Traffic: Food Service Industry Rushes to Offer Promotions At the same time, U.S. restaurants are also striving to stimulate demand through discounts—after prices had risen for several consecutive years. According to market research firm Black Box Intelligence, same-store foot traffic has declined across all restaurant categories in the U.S. this year—especially among restaurant chains. To lure customers back, these chains have rolled out more discounts and promotions this year. For example, Domino’s Pizza announced on Thursday that prices rose 1.6% in its latest quarter. As low-income consumers cut back on delivery spending, the chain is stimulating purchases with more temporary promotions. In September, Domino’s launched a promotion offering large pizzas at medium-pizza prices on select orders; this month, it revived last year’s “Emergency Pizza” buy-one-get-one-free deal.

Low-income consumers are tightening their wallets—McDonald’s faces a sharp drop in customer traffic, and chill winds are sweeping across the U.S. food service industry.

The U.S. food service industry is confronting a severe confluence of headwinds. According to the latest survey by UBS analyst Dennis Geiger, macroeconomic pressures, persistently high gasoline prices, and soft demand from low-income consumers continue to weigh heavily on both foot traffic and sales performance at restaurant chains—leaving industry sentiment “broadly cautious.” Feedback from McDonald’s and Wingstop franchisees is especially alarming. McDonald’s franchisees report uneven performance so far in Q2 2026, with high gasoline prices delivering a particularly pronounced blow to consumption intent among its core low-income customer base. Wingstop franchisees report ongoing negative trends in both same-store sales and foot traffic, with multiple overlapping factors suppressing results. Meanwhile, the national average gasoline price has remained above the politically sensitive threshold of $4.00 per gallon for ten consecutive weeks. As tax-refund tailwinds fade, financial pressure on wage-earning consumers is becoming increasingly tangible. Geiger warns that, with tougher year-over-year comparisons looming in the second half and recent headwinds persisting, his outlook for the food service sector has grown more conservative. McDonald’s and Wingstop Franchisees: Pressure on Foot Traffic, Differing Challenges Per recent communications between UBS and management and franchisees of major restaurant brands, McDonald’s franchisees attribute Q2’s softness primarily to two factors: (1) tough year-over-year comparisons stemming from April’s elevated base, and (2) the direct dampening effect of high gasoline prices on consumption willingness among its core low-income customer segment. Franchisees candidly acknowledged that if macro headwinds persist, comparative pressure in the second half will likewise be substantial. Nonetheless, McDonald’s franchisees remain cautiously optimistic about the brand’s long-term prospects—and cite several potential catalysts: recently launched specialty beverages—including “dirty sodas” and refreshing drinks—have already lifted average transaction value; an energy drink line is slated for rollout in August; new chicken items and snack rolls are also on the menu; the World Cup meal bundle (including collectibles) got off to a strong start, and the upcoming “Home Alone” meal bundle in Q4 holds promise; value platforms such as the “Under-$3 Menu” and the “$4 Breakfast Menu” are expected to gradually lift foot traffic over the coming quarters; and digital channels, delivery, and loyalty programs continue to deliver incremental gains. For Wingstop, franchisees cite a broader set of pressures: persistent macroeconomic strain impacting its core customer base; difficult-to-surmount high base effects from several years of robust sales growth—including expansion in delivery, marketing, and sports sponsorships; consumer fatigue with chicken offerings, as most quick-service peers pivot to chicken amid soaring beef costs; self-cannibalization in highly penetrated delivery markets; intensifying industry-wide promotional competition; and a recent decline in social media buzz. Still, franchisees anticipate a short-term boost from the World Cup (June–July), with sales trends potentially turning positive later this year—or early in 2027.

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