American households are getting pickier when it comes to what they spend on, creating winners and losers in the consumer industry. High prices and climbing borrowing costs are squeezing budgets, forcing people to prioritize essentials over splurges. The belt-tightening is hurting emblems of discretionary spending — entertainment-and-leisure companies like Dave & Buster's Entertainment Inc. and Lucky Strike Entertainment Corp. — especially hard.

Moody's Ratings cut its outlook on Dave & Buster's debt to negative from stable Monday on the company's weak financial performance. Last month, Dave & Buster's reported second quarter earnings that fell short of expectations across all metrics largely because of a steep drop in entertainment revenue. Similarly, Lucky Strike's credit rating was downgraded this month from B to B-, six notches below investment grade, by S&P Global Ratings.

Theme park operator Six Flags Entertainment Corp. is also under stress. Pool supplier Leslie's Inc. has been considering a range of strategic options to address its debt load, including a potential Chapter 11 bankruptcy filing. America's Car-Mart Inc., a subprime auto lender, reported a 52% plunge in inventory and a 27% drop in car sales in July.

To be sure, broad measures of the consumer such as payrolls, retail sales and wages remain generally strong. There are even a few bright spots. Movie theater operator AMC Entertainment Holdings Inc. reported its best quarter since the pandemic.