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Shares of Advance Auto Parts plummeted Wednesday morning after the company’s first-quarter earnings significantly missed Wall Street’s expectations.
The company also slashed its yearly guidance and quarterly dividend.
The auto parts supplier blamed its results and bleaker outlook on higher-than-expected costs, inflationary pressure, supply chain problems and lower, unfavorable product mix.

Customer vehicles sit parked outside an Advance Auto Parts automotive supply store in La Grange, Kentucky.
Luke Sharrett | Bloomberg | Getty Images

Shares of Advance Auto Parts plummeted nearly 30% during premarket trading Wednesday after the company’s first-quarter earnings significantly missed Wall Street’s expectations and executives slashed the retailer’s yearly guidance and quarterly dividend.
The Raleigh-based auto parts supplier blamed its dismal first-quarter results and bleaker outlook on higher-than-expected costs for its professional sales, inflationary pressure, supply chain problems and lower, unfavorable product mix.

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The company’s earnings per share for the period came in at just 72 cents, compared with an expected $2.57 per share, according to average analyst estimates compiled by Refintiv. Its quarterly revenue of $3.42 billion slightly missed expectations of $3.43 billion.
“We expect the competitive dynamics we faced in the first quarter to continue, resulting in a shortfall to our 2023 expectations. We have reduced our full-year guidance and our board of directors made the difficult decision to reduce our quarterly dividend,” CEO Tom Greco said in a statement.
On Tuesday, the company declared a dividend of 25 cents per share to be paid out in July. In its prior-quarter earnings release, Advance Auto Parts declared a dividend of $1.50 per share.
Advance Auto Parts also cut its full-year profit outlook and now expects earnings per share of between $6 and $6.50, down from a previously stated range of $10.20 to $11.20. That’s despite lowering its net sales expectations by a range of just $200 million to $300 million, signaling operational problems with margins.
For the first quarter, the company’s net sales rose 1.3% to $3.4 billion compared to a year ago. Its gross profit declined by 2.4% to $1.5 billion.

Net income for the period was $42.7 million, or 72 cents per share, down from $139.8 million, or, $2.28 per share, a year earlier.
“While we anticipated the first quarter would be challenging, our results were below our expectations,” Greco said.
This story is developing. Please check back for updates. More

American Airlines raised its adjusted earnings outlook for the second quarter.
The carrier cited strong travel demand and lower fuel prices.
American’s CEO is scheduled to speak at a Bernstein investor conference later Wednesday.

An American Airlines plane takes off from the Miami International Airport on May 02, 2023 in Miami, Florida. 
Joe Raedle | Getty Images

American Airlines raised its adjusted earnings outlook for the second quarter thanks to strong travel demand and lower fuel prices.
Adjusted per-share earnings will come in between $1.45 and $1.65, American estimated Wednesday, up from a previous forecast of $1.20 to $1.40 per share. The Fort Worth, Texas-based airline said it’s now expecting unit revenues in the three months ending June 30 to come in 1% to 3% lower than the same period last year, an improvement from a prior forecast for a decline of as much as 4%.

American’s shares were up more than 2% in premarket trading.
American Airlines CEO Robert Isom is scheduled to speak at the Bernstein Strategic Decisions Conference at 4:30 p.m. ET on Wednesday.
He will likely face questions about a new preliminary labor agreement with pilots and whether the carrier will appeal a federal judge’s ruling this month that knocked down American’s partnership in the Northeast with JetBlue Airways.
The airline is scheduled to report results for the second quarter at the end of July. More

Many retailers say retail theft is on the rise and is leading to lower profits.
Retail shrink refers to the loss of inventory from a variety of factors, including employee theft, shoplifting, administrative or cashier error, damage or vendor fraud. 
Homeland Security Investigations, the primary federal agency that tackles organized retail theft, defines the crime as “the association of two or more persons engaged in illegally obtaining items of value from retail establishments, through theft and/or fraud, as part of a criminal enterprise.”

For several years, the terms shrink, retail crime and organized retail theft have echoed from the mouths of politicians, police officers, trade groups and the country’s most prominent retail executives.
Politicians and police departments have sounded the alarm about rising retail theft, and are calling for stricter enforcement and prosecution to fight it. 

Trade groups and retailers have griped about shrink’s effect on profits, and warned it could lead to store closures, employee-retention issues, safety concerns and reduced investment returns over time. 
All of these parties have urged passage of legislation they say would better equip law enforcement officials to crack down on the growing trend and catch those responsible. 
What is shrink, anyway? And how does it differ from retail crime and organized retail theft?
Here’s everything you need to know about the topic. CNBC gathered this information using interviews with trade associations, retailers, law enforcement officials and publicly available records, including securities filings, survey data and transcripts from retail earnings’ calls.

What is retail shrink?

When retailers use the term shrink, they’re referring to the difference between inventory they’re supposed to have on their balance sheets and their actual inventory. 

Shrink captures the loss of inventory from a variety of factors, including employee theft, shoplifting, administrative or cashier error, damage or vendor fraud. 
For example, a retailer could have $1 billion in inventory on its balance sheet, but a count could show only $900 million in merchandise, indicating it lost $100 million in shrink. 
But it is difficult to figure out how the items were lost. Shrink could refer to anything from expired food to a broken jar of pickles, from cosmetics that a cashier rang up incorrectly to a bottle of aspirin that was stolen and later resold online. 

Locked up merchandise, to prevent theft in Target store, Queens, New York. 
Lindsey Nicholson | Universal Images Group | Getty Images

Shrink, including shoplifting and organized retail crime, cost retailers $94.5 billion in 2021, up from $90.8 billion in 2020, according to a 2021 study conducted by the National Retail Federation that used data from 63 retailers. That is the most recent data available. 
The companies polled for the survey estimated that retail theft accounted for 37% of those losses, employee or internal theft 28.5% and process and control failures 25.7%. Unknown loss and other sources accounted for the rest. 
However, those figures are largely estimates because of how difficult it is for retailers to figure out whether an item was stolen, lost or missing for other reasons. It’s not like thieves inform retailers about the merchandise they’re taking with them. 
Retailers with commercial property insurance can be covered for unforeseen losses such as theft, depending on the policy. It’s unclear which retailers have such insurance and if they do, how much it covers.

Which retailers have cited shrink and retail theft as a problem?

For the last couple of years, retailers have blamed smaller than expected profits on retail theft, shrink and organized retail theft. And the problem hasn’t gone away this earnings season. 
In May, Target, Dollar Tree, Home Depot, T.J. Maxx, Kohl’s and Foot Locker all cited shrink, retail theft or both as a reason for lower profits or hits to gross margins. 
Target lost about $763 million from shrink in its last fiscal year, and said shrink is expected to shave more than $1 billion off its profits in its current fiscal year.
Foot Locker said heavy discounting, and an uptick in retail theft, shaved 4 percentage points off its margins in the first quarter compared to the prior-year period. The hit to merchandise margins was “driven by higher promotions,” the company said. It’s not clear how big of an effect retail theft had on the results, or if promotions were the primary reason for the profit loss.
Home Depot said its gross margins fell slightly due to “increased pressure from shrink.”
In the past, Walmart, Best Buy, Walgreens, Lowes and CVS have all cited shrink and retail theft as an issue.
In January, Walmart’s CEO Doug McMillon told CNBC theft is “higher” than it has been historically.  “If that’s not corrected over time, prices will be higher, and/or stores will close,” he said. 
Still, others have said the problem has stabilized.
Best Buy, which previously spoke out about retail theft, said shrink levels have stabilized to pre-pandemic levels. Because of the pricey electronic goods it sells, its stores were already fortified against thieves, the company said.
In January, Walgreens’ Chief Financial Officer James Kehoe said the company’s concerns may have been overblown after shrinkage stabilized over the past year. 
“Maybe we cried too much last year,” Kehoe said on an earnings call with investors.
Shrinkage was about 3.5% of sales last year, but as of January, the number was closer to the “mid-twos,” said Kehoe. He also said the company would consider moving away from hiring private security guards.

What is organized retail theft and how is it different from shoplifting?

Homeland Security Investigations, the primary federal agency that tackles organized retail theft, defines the activity as “the association of two or more persons engaged in illegally obtaining items of value from retail establishments, through theft and/or fraud, as part of a criminal enterprise.”
The NRF defines organized retail theft as the “large-scale theft of retail merchandise with the intent to resell the items for financial gain.” The trade group says it typically involves a criminal enterprise with multiple levels. 
At the bottom are boosters, the people who steal items from the stores. They then turn the items over to fencers, who pay the boosters for the products for a fraction of what they cost. 

A group robs a jewelry store, in an incident law enforcement says is an example of organized retail theft
police handout

Fencers then resell the items. They often sell the goods online, in informal street markets or even to other retailers. Sometimes, the products are exported to foreign countries. 
The line between organized retail theft and shoplifting can be murky, but they are distinctly different. 
Organized retail theft involves a larger criminal enterprise. Traditional shoplifting can often be need based or done for other reasons that don’t involve the elaborate reselling of goods in concert with others. 
An example of retail theft, or shoplifting, could be a teenager who steals a T-shirt or an impoverished person who steals food.

What is the impact of retail theft and why is it such a big deal these days? 

Shoplifting and coordinated theft are old crimes, but many experts say organized retail theft has grown alongside the rise of online shopping, which has allowed groups to reach more customers. 
In the past, fencers often offloaded stolen goods in informal places like flea markets or disreputable small retail businesses. But with the rise of online marketplaces, criminal groups now have access to broad swaths of consumers.
After the Covid pandemic led to widespread store closures and lockdowns, e-commerce became the primary way consumers shopped, which caused organized retail theft to increase, some experts said.
“With Covid, there were more and more consumers buying online than in brick-and-mortar stores, and so the criminal actors were seeing even more profit from their illicit activity, and so it only exacerbated the problem,” said Lisa LaBruno, the senior executive vice president of retail operations for the Retail Industry Leaders Association.
“It keeps going back to the lack of accountability, and the massive profitability that criminal actors are experiencing as a result of the fact that they can hide behind their computer screens,” she said. 
Organized retail theft has also increased because it can be low risk relative to other criminal ventures, such as armed robbery or drug dealing. 
For example, the crime of petit larceny is charged in New York when an individual steals less than $1,000 worth of goods. If convicted, the defendant faces up to a year in jail. But they can also receive probation, community service and fines, in addition to restitution. 
Further, individuals charged with petit larceny in New York are almost always automatically released after their arrest because of recent criminal justice reforms to the state’s bail law. 
Conversely, armed robbery is a felony in New York and comes with much stiffer penalties. 

Manhattan DA Alvin Bragg is pictured during a press conference related to reducing shoplifting Wednesday, May, 17, 2023 in Manhattan, New York.
Barry Williams | New York Daily News | Getty Images

Supervisory Special Agent John Willis, who is part of an organized retail theft task force out of the Homeland Security Investigations Charlotte field office, said individuals he has arrested for the practice have cited the low-risk nature of the offense as the reason for committing it.
“I arrested some individuals when I first got here to Charlotte, who, prior to committing [organized retail crime] violations, they were drug dealers and violent criminals who spent time in both state and federal penitentiary for violent crimes and drug dealings,” Willis told CNBC. 
“And they simply said, ‘I make more money. And if I get caught, nothing really happens to me.’ So they get out of jail and they go, ‘we learned our lesson, let’s not do drugs and hurt people, let’s just start stealing stuff,'” he said.
Further, many retail security guards have a “hands off” approach when they witness theft, added Special Agent Willie Carswell, who is part of the same task force. Security guards are often instructed to just call law enforcement when they see a theft in progress. 
“If a booster knows that he can go in and he can rip them off and he’s not going to encounter any type of resistance when he does it, of course the risk versus reward goes up for him. He knows that’s where he needs to be. He’s not having to steal this out of somebody’s backyard where he might get shot. He knows he can go into the store and he can rip them off,” said Carswell.

What types of items are frequently stolen?

The items most frequently stolen by organized theft groups tend to be the ones most in demand by shoppers.
When consumers shop on online marketplaces such as Amazon and eBay, a few specific items have a high risk of coming from an organized theft group. 
Over-the-counter drugs are by far the largest class of items that are stolen and resold online, and allergy medicines are the largest subgroup, law enforcement sources told CNBC. The sources spoke on the condition of anonymity because they weren’t authorized to speak on the matter.

 A customer shops for items in a Walgreens in Niles, Illinois. 
Tim Boyle | Getty Images

In 2022, one retailer lost $2.9 million worth of allergy medicines alone, the sources said. 
When shopping on online marketplaces, consumers should be wary of buying Zyrtec, 60 or 90 count, Allegra and Claritin. Other OTC drugs that could be stolen goods include Prilosec, Nexium, CQ10, Advil, Tylenol and Prevagen, the sources said. 
Currently, facial creams also are being targeted, and include items from drug store brands like Olay, Neutrogena, Roc and L’Oreal, the sources said. 
— Additional reporting by CNBC’s Melissa Repko More

While tech wunderkinds and celebrities may get the most attention, the world’s billionaires are largely aging entrepreneurs.
The median age of the world’s billionaires is now 67, data firm Altrata said in a new report.
Forty-two percent are over the age of 70, and fewer than 10% are under the age of 50, according to the study.

French luxury group LVMH Chairman and Chief Executive Officer Bernard Arnault
Eric Piermont | AFP | Getty Images

While younger tech billionaires like Elon Musk, 51, and Mark Zuckerberg, 39, may dominate the wealth headlines, the majority of the world’s billionaires are over retirement age, according to a new study.
The median age of the world’s 3,194 billionaires is now 67 years old, data firm Altrata said in a report released Wednesday. Forty-two percent are over the age of 70, and fewer than 10% are under the age of 50, according to the report.

The findings highlight the wide gap between the perception and reality of the world’s billionaires.
While tech wunderkinds and music and sports celebrities may get the most attention, the world’s billionaires are largely aging entrepreneurs, such as Warren Buffett, 92, and Bernard Arnault, 74, who spent a lifetime, or even generations, reaching the three-comma club and accumulating their wealth. According to the report, the median age of the world’s billionaires has actually increased slightly over the past five years.
“Many of the younger billionaires have made their wealth in tech, which has been a fast wealth-creation industry and gets a lot of media attention,” said Maya Imberg, senior director and head of thought leadership and analytics at Altrata. “But most wealth takes a long time to accumulate unless it’s inherited. It takes a vast majority of their business lives to create that amount of wealth.”
The different age groups of billionaires also have different sources of wealth. For billionaires under 50, tech and banking/finance account for the bulk their wealth creation, with 21% making their fortunes in banking/finance and 20% in tech. Billionaires between ages 50 and 70 made most of their money in banking/finance (24%) and industrial conglomerates (8.3%), while those over 70 made their billions from finance (18%), conglomerates (11%) and real estate (8.3%).
Overall, the population of the world’s billionaires fell 3.5% in 2022, to a total of 3,194, according to Altrata. While the number of billionaires may have stabilized or even inched up slightly this year with the rising tech sector, the decline in 2022 marked the first slide since 2018, according to the report.

North America saw a 2.3% decline, to 1,011 billionaires, while Asia saw a 7.1% decline and Europe a 2.2% decline. The U.S. still has the largest number of billionaires in the world by far, with 955, accounting for nearly one-third of the world’s billionaires. China had 357 billionaires by the end of 2022.
Women still account for a small share of billionaires, at 12.5%, according to the report. Yet as a group they are younger than their male counterparts, with 18% of billionaires under the age of 50.
“Diversifying global wealth markets, the growth in female entrepreneurship, slowly evolving cultural (and boardroom) attitudes and the rising frequency of substantial intergenerational wealth transfers are all contributory factors,” to the rise in younger women, according to the report.
New York is still the top city for billionaires worldwide, with 136, according to the report. Hong Kong ranked second, with 112, followed by San Francisco (84), Moscow (76) and London (75).
While four of the top 15 billionaires’ cities are in the U.S., Imberg said the world’s wealth is quickly spreading to other countries.
“If you would have looked at the city list 10 years ago, it would have looked different,” she said. “Now, there are quite a few Chinese cities and non-U.S. cities on the list.” More

The TSA said it screened nearly 9.8 million people over the weekend.
The tally topped pre-pandemic levels.
Relatively good weather helped airline operations over the holiday.

Travelers arrive for flights at O’Hare Airport on May 25, 2023 in Chicago, Illinois.
Scott Olson | Getty Images

Memorial Day air travel surpassed pre-pandemic levels, showing how consumers continue to shell out for trips despite persistent inflation.
The Transportation Security Administration screened 9.79 million people from Friday through Monday, up slightly from the holiday weekend in 2019. Friday’s screening total of more than 2.7 million people was a post-pandemic record, the agency said.

The start of the peak travel season is crucial for airlines as they test travelers’ appetite to continue paying for vacations and other trips while higher interest rates and lofty food and housing costs weigh on household budgets.
Last year, bad weather coupled with staffing shortages and other strains led to an increase in flight disruptions over the peak period. Airline executives have been upbeat about their carriers’ ability to operate reliably this summer.
Relatively clear weather helped air travel over the weekend, and 16% of flights arrived late from Friday through Monday, according to FlightAware, a flight-tracking site. Delays fell from the holiday weekend last year. More

Nationally, home prices in March were 0.7% higher than March 2022, the S&P CoreLogic Case-Shiller Indices said.
After seasonal adjustment, prices increased nationally 0.4% in March compared with February. The 10-city composite gained 0.6% and 20-city composite rose 0.5%.

A potential buyer walks in to view a home for sale during an open house in Parkland, Florida on May 25, 2021. 
Carline Jean | Tribune News Service | Getty Images

Steep competition in the housing market and low supply are heating up home prices again.
Nationally, home prices in March were 0.7% higher than March 2022, the S&P CoreLogic Case-Shiller Indices said Tuesday.

“The modest increases in home prices we saw a month ago accelerated in March 2023,” said Craig J. Lazzara, managing director at S&P DJI in a release. “Two months of increasing prices do not a definitive recovery make, but March’s results suggest that the decline in home prices that began in June 2022 may have come to an end.”
The 10-city composite, which includes the Los Angeles and New York metropolitian areas, dropped 0.8% year over year, compared with a 0.5% increase in the previous month. The 20-city composite, which includes Dallas-Fort Worth and the Detroit area, fell 1.1%, down from a 0.4% annual gain in the previous month.
Home prices are rising again month to month, however. After seasonal adjustment, prices increased nationally 0.4% in March compared with February. The 10-city composite gained 0.6% and 20-city composite rose 0.5%.
Lazzara also noted that the price acceleration nationally was also apparent at a more granular level. Before seasonal adjustment, prices rose in all 20 cities in March (versus in 12 in February), and in all 20 price gains accelerated between February and March.
Miami, Tampa, and Charlotte saw the highest year-over-year gains among the 20 cities in March. Charlotte replaced Atlanta in third place. Compared with a year ago, 19 of 20 cities reported lower prices with only Chicago showing an increase at 0.4%.
“One of the most interesting aspects of our report continues to lie in its stark regional differences,” added Lazzara. “The farther west we look, the weaker prices are, with Seattle (-12.4%) now leading San Francisco (-11.2%) at the bottom of the league table. It’s unsurprising that the Southeast (+5.4%) remains the country’s strongest region, while the West (-6.2%) remains the weakest.” More

A GREY RECTANGULAR building on the outskirts of San Jose houses rows upon rows of blinking machines. Tangles of colourful wires connect high-end servers, networking gear and data-storage systems. Bulky air-conditioning units whirr overhead. The noise forces visitors to shout. The building belongs to Equinix, a company which leases data-centre space. The equipment inside belongs to companies from corporate giants to startups, which are increasingly using it to run their artificial-intelligence (AI) systems. The AI gold rush, spurred by the astounding sophistication of “generative” systems such as ChatGPT, a hit virtual conversationalist, promises to generate rich profits for those who harness the technology’s potential. As in the early days of any gold rush, though, it is already minting fortunes for the sellers of the requisite picks and shovels.On May 24th Nvidia, which designs the semiconductors of choice for many AI servers, beat analysts’ revenue and profit forecasts for the three months to April. It expects sales of $11bn in its current quarter, half as much again as what Wall Street was predicting. As its share price leapt by 30% the next day, the company’s market value flirted with $1trn. Nvidia’s chief executive, Jensen Huang, declared on May 29th that the world is at “the tipping point of a new computing era”.Other chip firms, from fellow designers like AMD to manufacturers such as TSMC of Taiwan, have been swept up in the AI excitement. So have providers of other computing infrastructure—which includes everything from those colourful cables, noisy air-conditioning units and data-centre floor space to the software that helps run the AI models and marshal the data. An equally weighted index of 30-odd such companies has risen by 40% since ChatGPT’s launch in November, compared with 13% for the tech-heavy NASDAQ index (see chart). “A new tech stack is emerging,” sums up Daniel Jeffries of the AI Infrastructure Alliance, a lobby group. On the face of it, the AI gubbins seems far less exciting than the clever “large language models” behind ChatGPT and its fast-expanding array of rivals. But as the model-builders and makers of applications that piggyback on those models vie for a slice of the future AI pie, they all need computing power in the here and now—and lots of it. The latest AI systems, including the generative sort, are much more computing-intensive than older ones, let alone non-AI applications. Amin Vahdat, head of AI infrastructure at Google Cloud Platform, the internet giant’s cloud-computing arm, observes that model sizes have grown ten-fold each year for the past six years. GPT-4, the latest version of the one which powers ChatGPT, analyses data using perhaps 1trn parameters, more than five times as many as its predecessor. As the models grow in complexity, the computational needs for training them increase correspondingly. Once trained, AIs require less number-crunching capacity to be used in a process called inference. But given the range of applications on offer, inference will, cumulatively, also demand plenty of processing oomph. Microsoft has more than 2,500 customers for a service that uses technology from OpenAI, ChatGPT’s creator, of which the software giant owns nearly half. That is up ten-fold since the previous quarter. Google’s parent company, Alphabet, has six products with 2bn or more users globally—and plans to turbocharge them with generative AI. The most obvious winners from surging demand for computing power are the chipmakers. Companies like Nvidia and AMD get a licence fee every time their blueprints are etched onto silicon by manufacturers such as TSMC on behalf of end-customers, notably the big providers of cloud computing that powers most AI applications. AI is thus a boon to the chip designers, since it benefits from more powerful chips (which tend to generate higher margins), and more of them. UBS, a bank, reckons that in the next one or two years AI will increase demand for specialist chips known as graphics-processing units (GPUs) by $10bn-15bn. As a result, Nvidia’s annual data-centre revenue, which accounts for 56% of its sales, could double. AMD is bringing out a new GPU later this year. Although it is a much smaller player in the GPU-design game than Nvidia, the scale of the AI boom means that the firm is poised to benefit “even if it just gets the dregs” of the market, says Stacy Rasgon of Bernstein, a broker. Chip-design startups focused on AI, such as Cerebras and Graphcore, are trying to make a name for themselves. PitchBook, a data provider, counts about 300 such firms. Naturally, some of the windfall will also accrue to the manufacturers. In April TSMC’s boss, C.C. Wei, talked cautiously of “incremental upside in AI-related demand”. Investors have been rather more enthusiastic. The company’s share price rose by 10% after Nvidia’s latest earnings, adding around $20bn to its market capitalisation. Less obvious beneficiaries also include companies that allow more chips to be packaged into a single processing unit. Besi, a Dutch firm, makes the tools that help bond chips together. According to Pierre Ferragu of New Street Research, another firm of analysts, the Dutch company controls three-quarters of the market for high-precision bonding. Its share price has jumped by more than half this year. UBS estimates that gpus make up about half the cost of specialised AI servers, compared with a tenth for standard servers. But they are not the only necessary gear. To work as a single computer, a data centre’s GPUs also need to talk to each other. That, in turn, requires increasingly advanced networking equipment, such as switches, routers and specialist chips. The market for such kit is expected to grow by 40% annually in the next few years, to nearly $9bn by 2027, according to 650 Group, a research firm. Nvidia, which also licenses such kit, accounts for 78% of global sales. But competitors like Arista Networks, a Californian firm, are getting a look-in from investors, too: its share price is up by nearly 70% in the past year. Broadcom, which sells specialist chips that help networks operate, said that its annual sales of such semiconductors would quadruple in 2023, to $800m.The AI boom is also good news for companies that assemble the servers that go into data centres, notes Peter Rutten of IDC, another research firm. Dell’Oro Group, one more firm of analysts, predicts that data centres across the world will increase the share of servers dedicated to AI from less than 10% today to about 20% within five years, and that kit’s share of data centres’ capital spending on servers will rise from about 20% today to 45%. This will benefit server manufacturers like Wistron and Inventec, both from Taiwan, which produce custom-built servers chiefly for giant cloud providers such as Amazon Web Services (AWS) and Microsoft’s Azure. Smaller manufacturers should do well, too. The bosses of Wiwynn, another Taiwanese server-maker, recently said that AI-related projects account for more than half of their current order book. Super Micro, an American firm, said that in the three months to April AI products accounted for 29% of its sales, up from an average of 20% in the previous 12 months.All this AI hardware requires specialist software to operate. Some of these programs come from the hardware firms; Nvidia’s software platform, called CUDA, allows customers to make the most of its GPUs, for example. Other firms create applications that let AI firms manage data (Datagen, Pinecone, Scale AI) More

Restaurants are expecting a boom in sales this summer, but consumers are still concerned about inflation.
Last year, restaurant sales in May, June and July were tepid as higher gas prices and concerns about the economy weighed on consumers.
Roughly a third of consumers surveyed by Datassential plan to dine out less over the next month, and about half plan to maintain their current restaurant-spending habits.

A waitress delivers sushi orders at Masa Hibachi Steakhouse & Sushi in Silver Spring, Maryland.
Bill O’Leary | The Washington Post | Getty Images

Warmer weather usually boosts restaurant sales, but diners may hold back for the second straight summer as inflation weighs on consumers’ minds — and wallets.
“I think operators are still hopeful for a good summer boon in foot traffic and sales … but I think on the consumer side, they’re more hesitant,” said Huy Do, research and insights manager at market research firm Datassential.

Last year, consumers pulled back on their restaurant visits in May, June and July amid inflation concerns. In addition to higher restaurant bills, diners were also paying more at the gas pump and in grocery stores.
Salad chain Sweetgreen said its sales slowed after Memorial Day and blamed the trend on a range of factors, including erratic returns to offices and surging summer travel. Chipotle told investors that its sales decelerated starting in late May, citing the broader economy, its new workforce and a return to normal seasonal fluctuations in college towns. And Shake Shack said its June sales disappointed as lower-income consumers visited less frequently.
Restaurant sales snapped back in August, which Black Box Intelligence attributed to higher consumer confidence levels as gas prices fell.
Inflation may be easing this year, but prices are still rising, adding to worries about regional bank failures and a potential recession before year-end. U.S. consumer sentiment fell to a six-month low in May, fueled by concerns about the debt limit standoff, according to a University of Michigan consumer survey.
Roughly a third of consumers surveyed by Datassential plan to dine out less over the next month, and about half plan to maintain their current restaurant-spending habits.

“Inflation and the economy are still more top of mind to consumers in terms of their financial planning, rather than any sort of fun or anticipation for travel,” Do said.
Despite diners’ caution, restaurants are optimistic that they’ll still see a summer boom. Nearly half of operators surveyed by Datassential anticipate higher sales or improved traffic this summer season.
The National Restaurant Association issued a “cautiously optimistic” seasonal forecast, according to Hudson Riehle, the trade group’s senior vice president of research.
Bars and eateries will add more than half a million seasonal jobs this summer — assuming lawmakers raise the debt limit, the NRA predicts. If the restaurant industry meets those expectations, it would be the strongest summer for hiring since 2017.
“The summer of 2023 is obviously going to be the most normal summer employment market since 2019,” Riehle told CNBC.
Summer typically ushers in a wave of seasonal restaurant jobs to meet higher demand, particularly in the Northeast and tourist destinations.

Travel tail wind

The travel industry is anticipating strong demand this year, which could boost sales for some restaurants. Half of Americans plan to travel and stay in paid lodging this summer, up from 46% last year, according to a Deloitte survey.
Roughly a quarter of every dollar spent at restaurants is tied to travel and tourism, according to Riehle’s estimates. Across restaurant segments, fast-food and fine-dining restaurants tend to benefit the most from tourism, Datassential’s Do said. Casual dining, which is already struggling to draw in eaters, is the least likely to see sales jump from travel.
But even a rosy travel outlook won’t necessarily lift the U.S. restaurant industry. Deloitte’s survey also found that more Americans are planning to travel internationally this summer — although international tourists visiting the U.S. could help make up that difference.
On top of that, only 53% of respondents plan to take at least one road trip, down from nearly two-thirds last year. That’s bad news for roadside fast-food restaurants that count on the business of feeding hungry travelers.

The push for value

Heading into summer, deals and promotions usually slow down because operators don’t need them to attract customers. But diners are starting to push back on higher menu prices and are embracing ways to pay less for their meals.
In the first quarter, restaurant traffic from consumers who took advantage of deals rose 8% compared with the year-earlier period, according to market research firm Circana.
At the same time, most restaurants’ profit margins are improving, so some are pivoting to value meals and other deals to draw customers.
For example, fast-casual chain Noodles & Co. told investors earlier in May that its customers were resisting its higher prices, especially after its latest increase of 5% in February. At the same time, the cost of ingredients for dishes like BBQ Chicken Mac have fallen faster than executives predicted, the company said.
So, Noodles & Co. plans to lean into deals. It brought back its popular 7 for $7 menu and introduced a $10 mac and cheese meal.
“Given where consumer sentiment is today, some of the data we’re seeing, we do feel that have to be a bit more value-oriented,” CEO Dave Boennighausen told CNBC. More