By Savyata Mishra and Juveria Tabassum

May 1 (Reuters) - Global fast food giants may have to

dole out steeper promotions to lure inflation-hit customers who

are increasingly opting to eat at home, following weak sales

from the likes of McDonald's and Starbucks ( SBUX ) this week.

Disposable income in the United States is declining,

particularly in the lower-income cohort, while the slow economic

recovery in China has increased industry-wide pressures for

quick-service chains including KFC ( YUM ) owner Yum Brands ( YUM ) that

has extended across several quarters.

Menu prices have risen across the industry over the past

year as companies try to mitigate higher commodity and supply

chain costs. However, that has hurt demand and boosted

consumers' desire to eat at home in the United States, the

world's largest economy.

"The lack of value offers has opened up consumers to shop

for different options whether it be other (chains) or the

grocery stores," Razmig Poundardjian, portfolio manager for

Carnegie Investment Counsel said.

Packaged food companies are also feeling the pinch of weak

consumer spending, especially from low-income households, as

their cookies and baked snacks see a slowdown in sales.

"Ongoing softness in U.S. biscuits is driven primarily by

brands that had higher penetration among lower-income households

such as Chips Ahoy!," Mondelez CFO Luca Zaramella said.

Meanwhile, Kraft Heinz ( KHC ) CEO Carlos Abrams-Rivera on

Wednesday noted "a clear pullback of restaurant spend by these

lower-earning households, especially in restaurants and

convenience stores."

China's weakness is also taking a toll. Coffee chain

Starbucks ( SBUX ) expects full-year comparable sales globally to come in

between flat and a low single-digit gain, lowering its previous

guidance, with CEO Laxman Narasimhan saying that customers had

made the trade-off "between food away from home and food at

home".

Burger giant McDonald's, which has a higher exposure

to the lower-income cohort, saw global sales growth slow for the

fourth straight quarter pushing it to lean on improving offers

on its meals.

"I think it's important to recognize that all income cohorts

are seeking value," McDonald's CEO Chris Kempczinski said on a

post-earnings call on Tuesday.

The U.S. consumer confidence index fell for the third

consecutive month in April, according to a survey conducted by

research group The Conference Board, which found that the first

place Americans are looking to save money is on meals away from

home.

Over the next six months, 44.8% of those surveyed said they

planned to cut back on food away from home to save money.

Domino's Pizza and Burger King owner Restaurant

Brands on the other hand got a sales boost in the

reported quarter on the back of their loyalty programs and

higher promotions.

So far this year, shares of Domino's Pizza have gained 27%,

while those of Restaurant Brands and McDonald's are down 6% and

8%, respectively. Shares of Starbucks ( SBUX ) have tumbled 22%.