American consumers, grappling with economic uncertainty and inflationary pressures, are pulling back on spending—an emerging trend now reflected in the financial results of some of the country’s most influential consumer companies.
Earnings calls from PepsiCo, Chipotle Mexican Grill, and Procter & Gamble this week painted a cautious picture of the months ahead, with executives citing subdued consumer sentiment and the mounting impact of US tariffs as significant headwinds.
PepsiCo feels the heat, offers lower-cost snack options
PepsiCo, a bellwether in the food and beverage industry, slashed its annual earnings forecast Thursday after reporting a decline in both revenue and net income in the first quarter.
The company said it now expects flat profit growth for the full year, reversing an earlier forecast of mid-single-digit growth.
Revenue fell 1.8% to $17.9 billion for the quarter ended March 22, while net income dropped 10% to $1.8 billion.
PepsiCo stock fell close to 5% in the late hours of trading on Thursday.
“Relative to where we were three months ago, we probably aren’t feeling as good about the consumer now,” Jamie Caulfield, PepsiCo’s chief financial officer, told analysts.
Executives cited weakening consumer spending, inflation, and higher costs associated with newly imposed tariffs, particularly on aluminum and imported goods, as the key reasons for the downward revision.
PepsiCo has responded by introducing smaller, lower-cost snack options to appeal to price-sensitive shoppers and by implementing cost-mitigation strategies to buffer against tariff-related impacts.
Despite softness in the US market, the company said performance in overseas markets remained solid, even as analysts warned of potential long-term fallout from trade tensions with China and Europe.
Chipotle, P&G also feel the pressure
Chipotle, too, reflected growing caution among US consumers.
The burrito chain reported its first same-store sales decline since 2020, attributing the slowdown to shifting economic sentiment following President Trump’s recent policy moves, including new 10% tariffs.
Chief Executive Scott Boatwright noted that discretionary spending had begun to slow in February and remained sluggish into April.
“They’re eating at home more frequently than they’re eating out,” he said of consumers, citing anxiety over household budgets and job security.
The chain also said tariffs would increase its food and packaging costs, prompting it to revise its full-year guidance downward.
Procter & Gamble offered another lens into changing household behavior.
The consumer goods giant reported a surprising decline in detergent sales, suggesting that families are even doing less laundry to reduce expenses.
“There’s clearly a pause in consumption,” said CFO Andre Schulten, adding that uncertainty surrounding tariffs and market volatility was prompting Americans to tighten their belts.
P&G also adjusted its full-year forecast to reflect these changes.
Confidence slipping, companies adapt
The Conference Board’s most recent survey revealed that consumer confidence hit a low in March not seen since early 2021.
The combination of volatile equity markets, shifting job prospects, and unpredictability in Washington’s trade policies has pushed many Americans to become more conservative with their spending.
At PepsiCo, the company is also responding to emerging consumer health trends.
CEO Ramon Laguarta noted that the popularity of GLP-1 weight-loss medications like Ozempic has contributed to declining snack sales and a move toward smaller portion sizes.
Additionally, the company is facing regulatory pressures.
Health Secretary Robert F. Kennedy Jr. recently announced a push for food manufacturers to phase out petroleum-based food colourings.
PepsiCo, he said, is among those working to comply by 2026.
Laguarta emphasised that over 60% of PepsiCo’s products already contain no artificial colours and that the transition toward natural options is well underway.
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