McDonald’s CEO Sounds Alarm on Customer Spending Woes Hurting Sales
The U.S.’ largest fast food chain is struggling with a big customer spending problem and it’s taking an epic toll on its bottom line. CEO Chris Kempczinski expressed concern on the company’s first-quarter 2025 earnings call, citing economic uncertainty and inflation as ringleaders of a concerning consumer behavior pattern.
Dropping Sales and Customer Traffic
Weighing down U.S. comparable sales Company-wide U.S. comparable sales fell 3.6% year-over-year in Q1 2025, dragging operating income down 3%. Kempczinski observed that there has been a steep decline in quick-service restaurant (QSR) traffic, specifically among low- and middle-income cohorts. “Total QSR industry traffic from the low-income demographic was down nearly double digits relative to last year quarter,” he said, noting that middle-income traffic is now falling at a matching clip.
Tapping in to that behavior follows a series of recent problems for McDonald’s, including backlash against menu price increases and an E. coli outbreak in October 2024 that briefly took the Quarter Pounder off the menu. That pressure has been compounded by forces that have made the customers more likely to pull back on fast-food spending.
Consumers Staying Home to Cook
According to a Datassential survey, 46% of U.S. diners are cutting back on spending at restaurants because of inflation and the increased cost of living, and 31% eat in to save cash. Kempczinski pointed to a surprising trend: breakfast, a longtime stronghold of McDonald’s menu, is also losing steam. “Morning becomes now a day part that you are seeing people thundering toward either not having breakfast or they’re thundering toward being at home as they eat,” he said.
McDonald’s Reaction: Value and Saving Money
McDonald’s has added efforts like the $5 Meal Deal and the “Buy One, Add One for $1″ to turn around sliding sales. The $5 Meal Deal drew some business but not enough, the second source said. Kempczinski stressed anew when value, “We will remain focused on delivering value and affordability to our customers.” He also said that menu price increases are decelerating as inflation cools, moving to match prices more closely with what consumers expect to be paying.
They are rolling out the McValue platform and even introducing classics like the Snack Wrap again in 2025 to win some loyalty back. McDonald’s is also testing out new ideas, such as the “Mood Engine” restaurant test in Hong Kong, in an effort to improve the dining experience and bring in new customers.
Uncertainty of Economic Climate and Geopolitics
Kempczinski said some of the sale downturn was due to the broader economic and geopolitical issues. “We came into 2025 understanding that this would be a difficult time in the QSR industry given macroeconomic uncertainty and headwinds on the consumer,” he said. Geopolitical tension has also depressed consumer sentiment and caused diners to be more careful when parting with their cash.
What’s Next for McDonald’s?
It is with a heavy heart that we announce that Germany will be temporarily closing our restaurants to ensure the health and well-being of our customers and employees,” the company’s German operation said in a statement. McDonald’s is optimistic it can make changes. And its history as a scrappy survivor — enhanced by digital ordering and delivery investments — will help it weather economic headwinds. Yet rebuilding confidence with customers again and winning back market share will not come easy and needs to be backed up by long term commitment to finding a balance between cheapness and acceptability.
With consumers cutting back and McDonald’s at a crossroads. Can its value-based tactics lure more frugal diners back and reverse the continued thrashing of the fast-food giant at the hands of changing consumer habits? Only time will tell.
Disclaimer: This article is for informational purposes only and does not constitute financial or investment advice. Always conduct your own research before making decisions.
