McDonald’s Battles Sales Slump with Bold Strategies Amid Global Consumer Slowdown

McDonald’s has reported mixed financial results for its latest quarter, with U.S. same-store sales taking a notable hit for the second quarter in a row. The 3.6% decline in domestic sales marks the company's worst performance in its home market since the second quarter of 2020, when the onset of the COVID-19 pandemic led to widespread lockdowns. This significant dip was largely attributed to poor weather conditions and increasingly cautious consumer behavior.

Expectations had been more optimistic, with analysts surveyed by StreetAccount forecasting a more modest 1.7% drop in U.S. same-store sales. However, CEO Chris Kempczinski noted during a conference call that quick-service restaurant traffic from low-income consumers had dropped by nearly double digits compared to last year. Worryingly, middle-income consumer traffic is now declining at nearly the same pace, signaling that economic stress is expanding across multiple income brackets.

Executives highlighted that McDonald’s customer base includes a larger proportion of low- and middle-income diners compared to its rivals, making it more vulnerable to economic downturns. While high-income customers continue to frequent the chain, their spending hasn't been enough to compensate for the drop in visits from other demographics. Overall, McDonald’s reported a 1% global same-store sales decline, partially affected by the absence of a leap day this year.

The company’s Q1 financial figures presented a mixed bag. Adjusted earnings per share came in at $2.67, slightly above the $2.66 Wall Street had predicted. On the other hand, revenue fell short of expectations, totaling $5.96 billion compared to the anticipated $6.09 billion. Net income also slipped to $1.87 billion, or $2.60 per share, from $1.93 billion, or $2.66 per share, a year ago. Net sales declined 3%, reflecting a broader downward trend.

CFO Ian Borden had anticipated earlier this year that the first quarter would be McDonald’s weakest, citing a sluggish start in the U.S. as one of the main reasons. Contributing to consumer hesitancy were recently imposed tariffs by President Donald Trump, which have raised concerns about rising prices. In response, McDonald’s is focusing on value-driven menu options and fan favorites, like the return of its snack wraps, to win back diners.

Initial signs show these efforts may be effective. The launch of McCrispy Chicken Strips has already seen strong demand even before a full advertising rollout. Additionally, the company’s collaboration with the video game franchise Minecraft, timed to coincide with a major movie release, quickly led to the sell-out of promotional collectibles. McDonald’s also confirmed that its $5 meal deal will continue through the rest of 2025 to appeal to budget-conscious customers.

International performance was also mixed. In its key international operated markets, including Australia and France, same-store sales declined by 1%, disappointing analysts who had predicted flat performance. These markets represent about half of McDonald’s total revenue. Borden noted that challenging economic conditions and weakening consumer confidence were consistent across most of the company’s major international regions.

Despite the rocky quarter, McDonald’s remains committed to its growth plans. The company reaffirmed its full-year guidance, including the opening of 2,200 new locations and capital expenditures between $3 billion and $3.2 billion. Executives expect that these new restaurant openings will contribute to a systemwide sales growth of just over 2%, signaling optimism for a stronger performance in the months ahead.