McDonald’s experienced a steeper-than-anticipated decline in customer traffic during the first quarter, a downturn attributed to economic uncertainties that have affected dining trends. This was notably pronounced in the United States, where same-store sales—defined as sales from outlets open for over a year—plummeted by 3.6%. This marks the most significant drop in U.S. sales since 2020 when the global pandemic forced the closure of stores and public locations across the nation.
The decline has been largely linked to economic apprehensions among lower- and middle-income consumers who are apprehensive about inflation and the broader economic landscape, as explained by McDonald’s Chairman and CEO, Chris Kempczinski. Consumer traffic from individuals earning $45,000 or less annually experienced a double-digit percentage drop, and middle-income consumer traffic saw a similar downturn. However, those earning $100,000 or more maintained steady traffic levels.
“We’re confident that McDonald’s can endure these challenging conditions more effectively than many others,” Kempczinski stated during a call with investors. “That said, we’re not completely immune to the industry’s volatility or the challenges our consumers face.”
McDonald’s struggles mirror those of its competitors. Yum Brands, which includes Taco Bell, KFC, Habit Burger & Grill, and Pizza Hut, reported a 2% decline in U.S. same-store sales for the first quarter. Similarly, Chipotle noted a decline in its same-store sales performance for the same period.
Globally, McDonald’s same-store sales saw a 1% decline in the first quarter, as increased traffic in areas like Japan, China, and the Middle East did not offset weaknesses in regions such as the U.K. Excluding the impact of the additional leap year day in 2024, same-store sales were essentially flat, contrary to Wall Street expectations of nearly a 2% increase, as forecasted by analysts polled by FactSet.
In response, McDonald’s rolled out a U.S. McValue menu, offering customers the option to purchase one item for $1 with the buy of a full-priced item. Additionally, the $5 Meal Deal will extend throughout the remainder of the year—a promotion initially launched last June and extended multiple times. Kempczinski indicated that while the $5 Meal Deal proves popular, the McValue menu hasn’t spurred the anticipated increase in sales, suggesting potential adjustments.
Forecasting an upbeat outlook, Kempczinski remarked on anticipated improvements beyond the first quarter, which McDonald’s expected to be its weakest of the year. April witnessed rapid sell-outs of collectible figures accompanying a “Minecraft Movie” meal, available in over 100 countries. Furthermore, the introduction of new chicken strips and the anticipated U.S. return of the snack wrap later this year are expected to bolster patronage.
Despite the financial strains imposed by tariffs, McDonald’s has stood by its annual financial targets. Kempczinski conveyed that internal surveys reveal that anti-American sentiment is not notably affecting consumer perception of McDonald’s in areas such as Canada and Northern Europe.
Shares of McDonald’s saw a 1% decline in Thursday morning trading. For the first quarter, the company’s revenue dropped by 3% to $5.95 billion, falling short of analysts’ expectations of $6.09 billion as per FactSet’s estimates. Additionally, net income fell by 3% to $1.86 billion. Adjusted for restructuring and one-time charges, McDonald’s delivered earnings of $2.67 per share, surpassing Wall Street projections by a narrow margin.