You should hear what the companies you’re loyal to are saying about you
It's almost like we're nothing but revenue to them.
With earnings season mostly in the bag, executives’ comments on pricing decisions — whether they’ve been able to continue pushing through hikes like they have in recent years, or whether they’ve been forced to retreat by recalcitrant consumers — have provided some of the most interesting color on the current state of the economy.
Companies often talk to their investors as if customers are just another moving piece of the business, but it’s especially noticeable with consumer behavior seemingly at a crossroads. Of course, how much consumers cut back demand in response to price increases — a concept known as elasticity — depends a lot on the industry and market the company is focused on.
Here’s what executives have been saying about consumers in recent weeks.
Hold onto your wallet in Vegas
Thomas R. Reeg, CEO of Caesars Entertainment: “We've not seen a lot of elasticity when it comes to pricing in Vegas. So we have continued to take price kind of across the board, not just rooms, restaurants, ATM, fees, pool, cabanas. There's just a massive amount of demand for Vegas.”
Starbucks Rewards members are getting deals
Rachel Ruggeri, CFO of Starbucks: “The majority of our promotional efforts were focused on driving growth in our Starbucks Rewards membership because we know that those members tend to increase their value for us over the lifetime. It's a more efficient way for us to promote.”
Upstate New York loves the $5 meal deal
Joe Erlinger, president of McDonald’s USA: “In Upstate New York, which has already had the deal, trial and participation rates actually doubled.”
Don’t expect cheaper auto parts
Brad Beckham, CEO, O'Reilly Automotive: “We're going to continue to invest in all the strategic initiatives, but don't feel like there's another round of price initiative necessary.”
Prices for cruises are still rising
Jason Liberty, CEO, Royal Caribbean: “All the yield improvement that you're seeing in Q3 and Q4 is really being driven by price. And so I think it's a really strong indication that not only the willingness to pay more, but these prices continue to increase.”
Rural shoppers are plumb tuckered out
Harry Lawton III, CEO, Tractor Supply: “Consumer spending on goods appears to be fatigued across income cohorts.”
Burrito lovers can breathe easy
John Hartung, CFO, Chipotle Mexican Grill: “Right now, we have no plans for further pricing. I mean, we'll look at how the rest of the next few months unfold...But it'd be great to not have to take any price for the rest of this year.”
Ford wants you to buy smaller EVs
James Farley, CEO, Ford Motor: “We believe smaller, more affordable vehicles are the way to go for EV in volume. Why? Because the math is completely different than [internal combustion engines]. In [internal combustion engines], a business we've been in for 120 years, the bigger the vehicle, the higher the margin. But it's exactly the opposite for EVs. The larger the vehicle, the bigger the battery, the more pressure on margin because customers will not pay a premium for those larger batteries.”
Clorox’s previous price hikes are sticking
Linda Rendle, CEO, Clorox: “We see no signs right now where we're panicked. We see categories that continue to be resilient, consumers looking for value. Pricing is holding in the marketplace, which is great after taking those multiple rounds of pricing.”
Chocolate might get more expensive
Michele Buck, CEO, Hershey: “We have experienced historic cocoa prices for some period of time now...absorbed a lot of inflation already, but we do believe we need to pass some of it on.”
