CHICAGO — Comparable restaurant sales at McDonald’s Corp. fell 3.6% in the United States during the first quarter of 2025, continuing the company’s struggle to increase customer traffic in the face of economic uncertainty and cautious consumer spending.
“We entered 2025 knowing it would be a challenging time for the QSR industry due to macroeconomic uncertainty and pressures weighing on the consumer,” said Christopher Kempczinski, president, chief executive officer and chairman of the board for McDonald’s. “During the first quarter, geopolitical tensions added to the economic uncertainty and dampened consumer sentiment more than we expected.
“We’re not immune to the volatility in the industry or the pressures that our consumers are facing. While we expected global QSR industry traffic would be down in the first quarter, actual industry traffic fell more than we anticipated in several of our large markets, including the US.”
Kempczinski said overall QSR industry traffic from the low-income consumer – a demographic McDonald’s has targeted heavily the past year with updated and expanded value menus – was down nearly double digits versus the prior year quarter.
McDonald’s CEO Christopher Kempczinski said more people are eating breakfast at home today, contributing to lower customer traffic.
| Photo: ©HOMANK76 – STOCK.ADOBE.COM“Middle-income consumers fell nearly as much, a clear indication that the economic pressure on traffic has broadened,” he said. “However, traffic growth from the high-income cohort remained solid, illustrating the divided US economy, where low- and middle-income consumers in particular are being weighed down by the cumulative impact of inflation and heightened anxiety about the economic outlook.”
For the first quarter ended March 31, McDonald’s net income fell 3% to $1.87 billion, equal to $2.60 per share on the common stock, from $1.93 billion, or $2.66 per share, a year ago. First-quarter revenue was $5.96 billion, down 3% from $6.17 billion during the first quarter last year. Total global comparable restaurant sales dropped 1%.
With a continued focus on affordable price points to attract low-income customers, the company launched its McValue platform in January – a buy-one-add-one for $1 menu – which is modelled after McDonald’s Saver menu in the United Kingdom, and its Loose Change menu in Australia, both of which have been in place for over ten years, according to Kempczinski. McDonald’s also will continue offering $5 meal bundles in the US.
“We know that leadership in value and affordability is paramount in an environment like this,” Kempczinski said, “and we’ve been expanding and refining our value proposition to meet the needs of our consumers, especially our low- and middle-income cohorts, as well as families internationally. Building upon the actions we began to take in 2024, we now have everyday affordable price menus, or EDAP, and entry-level meal bundles in each of our big five international operated markets.”
As has been noted by some industry observers, a drop in breakfast sales can be an indicator of economic uncertainty, because it costs less to eat breakfast at home. In response to an analyst question about whether McDonald’s drop in customer traffic might be due to increased restaurant competition, Kempczinski said, “… morning now is a place that you’re seeing people who are choosing either to skip breakfast or they’re choosing to eat at home for breakfast. And I think that’s more to explain what’s going on in the US versus any segment shift.”
Beverages and chicken
Two categories Kempczinski said McDonald’s can gain market share is in beverages and chicken, both segments where competitors have successfully engaged customers. “Increasingly, we’re competing against specialists, and so we’re bringing a specialist focus into McDonald’s,” he said. “Later this year, in partnership with our franchisees, we’ll be launching a beverage test in the US in some of our existing McDonald’s restaurants that will incorporate new menu items inspired by CosMc’s.”
The company currently has five beverage-centric, freestanding CosMc’s locations – one in Illinois, and four in Texas – and since launching in 2023, Kempczinski said a valuable piece of data from CosMc’s is customization of beverages is only about 20% of orders, with the other 80% being direct orders from the menu, even though CosMc’s allows customization of any drink. This means McDonald’s can carry over bestsellers from CosMc’s menu intact to McDonald’s locations without straining labor because customization won’t be an option.
“The other thing we’ve learned from CosMc’s is anytime the McDonald’s brand is attached, the consumer wants to buy food with (the beverages). Food is still going to be an important part of whatever our beverage offering is because that’s the consumer’s expectation for the McDonald’s brand,” Kempczinski said.
McDonald’s recently launched McCrispy Strips to help the company gain market share for chicken.
| Photo: McDonald's Corp.As for chicken, McDonald’s recently launched its McCrispy Strips – the first permanent menu item added to US locations since 2021 – to try and tap further into growing consumer demand for chicken. “Chicken strips will allow us to reintroduce (chicken) snack wraps, which will be coming later in the year as well,” Kempczinski said.
Based on first-quarter results, Ian Borden, executive vice president, chief financial officer, McDonald’s, said, “While we remain cautious about consumer sentiment, we are reaffirming our full-year 2025 financial targets that we outlined in February, which include the impact from tariffs that are currently in place.
“We expect foreign currency translation to be a tailwind to 2025 earnings per share of about 5¢ per share based on current exchange rates. That’s a significant change versus our previous estimated headwind of 20¢ to 30¢ per share, reflecting the recent weakening of the US dollar versus major currencies.”
