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Low-Income Shoppers Cut Food, Beverage Spending Amid Inflation and Tariffs

Food and Beverages

Business Honor - Low-Income Consumers Slash Food Spending

Business Honor
07 August, 2025

Rising prices drive demand for smaller meals, cheaper groceries, and value menus.

Low-income consumers throughout the U.S. are feeling the squeeze as rising prices, driven by tariffs and inflation, necessitated price increases compel them to reduce spending on daily expenses. Households with incomes under $75,000 annually are reducing restaurant meals, vacations, and even staples such as soda, beer, and diapers. Big brands such as Procter & Gamble, Coca-Cola, and Chipotle reported that consumers are seeking out lower-priced alternatives. They are increasingly purchasing smaller sizes or searching for $5 or less meals at restaurants.

Chipotle's CFO, Adam Rymer, added that the company is noting the financial strain being put on low-income customers. McDonald's also reported a decline in visits from them, even with promotions such as the $2.99 Snack Wrap. To date, consumers who make up to $50,000 per year are hit hardest, with spending on credit cards falling during the summer, Bank of America reported. Meanwhile, chains such as Taco Bell and Kraft Heinz are launching low-cost products aimed at frugal purchasers.

Tariffs imposed by President Donald Trump have already increased prices on certain items, and businesses are passing the costs along to consumers. Yale researchers caution that the lowest-income Americans are being impacted most by the price increases. The reduction in consumer savings accounts, increased interest rates, and potential reductions in food assistance programs are also putting pressure.

Companies such as Adidas and Molson Coors are making a change, creating smaller, cheaper alternatives as consumers become more frugal. It is vital to get low-income consumers back on board, particularly since this demographic has frequented fast-food establishments more often than those making more money in the past, according to experts. But with hiring slowing and inflation lingering, more Americans are being compelled to rethink where they spend each dollar.