Eateries are vying for customers with a tight budget.

Eateries wage a battle for budget-conscious eaters' cash.

Originally published in the CNN Business' Before the Bell newsletter, you can subscribe here. Listen to the audio version of the newsletter by clicking the same link.

Starbucks experienced a 3% decline in same-store sales during the past quarter, marking the first decline since 2020 and quite a contrast from a 12% increase the preceding year. In China, Starbucks' second-largest market, same-store sales dropped by 11%. The company also cut down its full-year sales expectations.

Starbucks noted that customers are spending more cautiously and less frequently, which negatively impacted the company's revenue.

"Many customers have been more selective about where and how they spend their money, especially with most pandemic stimulus savings used up," said Starbucks CEO Laxman Narasimhan during the earnings call.

This aligns with the recent reports from companies: Consumers are tightening their budgets in the face of soaring interest rates, persisting inflation, depletion of pandemic-era savings, and a shaky economic outlook.

Starbucks is adapting to attract more customers and regulars with options like sugar-free customizations for drinks, a zero-to-low-calorie energy beverage, and improved features on its mobile app.

During the last few months, companies have had to compete fiercely for dwindling customers, and Starbucks is no exception.

With inflation pushing food prices higher, many Americans have opted to cook at home in order to save money. The March Consumer Price Index showed that food consumed at home had no change in price monthly. Meanwhile, prices of food eaten away from home increased by 0.3% from the previous month.

This shift from dining out to cooking at home has affected McDonald's sales. The fast-food chain reported a 1.9% increase in global same-store sales during the first quarter, significantly lower than the 12.6% growth the previous year.

McDonald's had previously leveraged its pricing power with its customer base, but recently admitted that consumers are growing impatient.

"Everybody is battling for the same customers, who visit less often," said Ian Borden, McDonald's global CFO, during the earnings call.

Darden Restaurants, the owner of Olive Garden, also felt the pinch from lower-income households. Its same-restaurant sales dropped in the latest quarter. The company noted fewer sales from households with incomes under $75,000 as compared to last year, and all brands in Darden's portfolio saw reduced transactions from households with incomes under $50,000.

"The lower-income consumer does seem to be pulling back," said Darden CEO Ricardo Cardenas in its earnings call.

Even as some households cut back, the higher-income customers continue to spend, sustaining the economy. Darden observed sales from households with incomes exceeding $150,000 rise compared to the previous year.

In the news: American oil tycoon accused of conspiring with OPEC to raise prices

Scott Sheffield, the founder and CEO of one of America's largest oil companies, stands accused of coordinating with OPEC and its allies to increase oil prices, federal regulators declared on Thursday.

According to the Federal Trade Commission, Sheffield had numerous WhatsApp conversations, in-person meetings, and public statements to attempt aligning oil production in the Permian Basin in Texas with OPEC's and OPEC+, a cooperative encompassing countries like Saudi Arabia and Russia.

Regulators allege that Sheffield, then the CEO of Pioneer Natural Resources, tried to manipulate oil production to boost his company's profit and that of its counterparts in OPEC and OPEC+ nations, all while hurting US households and businesses.

"Mr. Sheffield's communications were designed to pad Pioneer's bottom line - as well as those of oil companies in OPEC and OPEC+ member states - at the expense of US households and businesses," the FTC complaint states.

In contrast to OPEC's approach, US oil production is meant to be decided by market forces, not by the leading players coordinating with each other.

What's in store for Friday's employment report

America's job market has been strong for the past three years. Some experts even say "it's as good as it's ever been," as my colleague Alicia Wallace explained. This positive narrative isn't expected to change when April's ' jobs report comes out on Friday at 8:30 a.m. ET, but there's a possibility of a slight slowdown in the significant gains observed in the first quarter.

"As long as rates remain high, they put a gradual squeeze on the economy," said Julia Pollak, primary economist at the employment website ZipRecruiter, in an interview with CNN. "I think we'll continue to observe a gradual, fairly orderly slowdown in the labor market until rates start coming down."

So far this year, the United States economy has added an average of 276,000 jobs per month, going by Bureau of Labor Statistics data. This is around 25,000 more jobs per month than in 2021 and 111,000 more per month than in 2019.

This week's economic projections suggest that employers added 232,500 jobs in April, according to FactSet consensus estimates. This would be a decrease from the estimated 303,000 net jobs added in March. The unemployment rate is predicted to remain at 3.8%.

If these predictions become reality, some impressive records will be set. It would mark the 40th consecutive month of job growth, making it the fifth longest streak on record, and the 27th month with the jobless rate below 4% - matching a streak from 1967 to 1970 that also lasted 27 months.

More information can be found here.

Just Salad staff member checks their hands for cleanliness using a scanner from PathSpot.

Read also:

In light of the current economic climate, many businesses are looking for ways to attract and retain customers. Starbucks, for example, is introducing sugar-free customizations and a low-calorie energy beverage to appeal to budget-conscious consumers. (investing in customer satisfaction through product offerings)

Given the tough competition in the business world, investing in understanding consumer behavior and preferences is crucial for companies to remain competitive and survive. (investing in consumer insights for business success)

Source: edition.cnn.com