McDonald's posted its steepest U.S. sales decline since the pandemic as inflationary pressures and rising economic anxiety weighed on lower- and middle-income diners. Comparable sales in the United States dropped 3.6% in the first quarter, the sharpest fall since the second quarter of 2020, and a signal that discretionary consumer spending may be softening more than anticipated.
"We believe McDonald's can weather these difficult conditions better than most," Chairman and CEO Chris Kempczinski said during a Thursday earnings call. "However, we're not immune to the volatility in the industry or the pressures that our consumers are facing."
Kempczinski attributed the pullback to falling traffic among customers earning under $100,000. "Industrywide traffic from consumers making $45,000 per year or less was down by double-digit percentages," he said. "Traffic from middle-income consumers was down nearly as much."
Global same-store sales declined 1% for the quarter, with growth in Japan, China, and the Middle East offset by weakness in the U.S. and U.K. Factoring out the leap year, the company said global sales were flat. Analysts polled by FactSet had expected a nearly 2% increase.
Revenue fell 3% year-over-year to $5.95 billion, missing Wall Street expectations of $6.09 billion. Net income slipped to $1.86 billion. Adjusted earnings came in at $2.67 per share, slightly ahead of projections. McDonald's shares declined roughly 1% in early Thursday trading.
The Chicago-based chain rolled out new pricing strategies, including a $5 Meal Deal and a U.S. McValue menu, but with mixed results. While the $5 deal is performing well, Kempczinski acknowledged the McValue menu "is not driving the additional sales the company expected," prompting potential changes ahead.
Despite the revenue miss, McDonald's reaffirmed its full-year guidance. Kempczinski said new product launches-including a "Minecraft Movie" promotional meal and upcoming reintroduction of snack wraps in the U.S.-are expected to help revive customer interest.
The sales slump comes as the broader U.S. economy contracted 0.3% in the first quarter, marking its first decline since 2022. McDonald's figures reflect consumer behavior before President Trump's April 2 tariff rollout. While the administration has argued that the policies will drive domestic job growth, companies ranging from Intel to Adidas have warned of higher prices and potential job losses tied to shifting trade rules.
"Consumers today are grappling with uncertainty, but they can always count on McDonald's [...] for exceptional value," Kempczinski said. "McDonald's has a 70-year legacy of innovation, leadership, and proven agility, all of which give us confidence in our ability to navigate even the toughest of market conditions."
