McDonald’s global comparable sales experienced a dip in the first quarter as consumers, weighed down by economic uncertainty, bought less fast food.
The company said its global comparable sales went down 1% year-over-year in the first-quarter, with its U.S. comparable sales seeing a 3.6% decrease.
Analysts had been anticipating a 0.95% increase for the former and a 0.5% drop for the latter.
The results echoed warnings from restaurant operators Domino’s Pizza, Chipotle Mexican Grill and Starbucks that Americans were spending less to dine out as inflation and a bleak economic outlook dent consumer confidence.
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Tariff flip-flops by the Trump administration have worsened wallet pressures and disrupted businesses, threatening to push up costs and upend supply chains.
The U.S. economy is struggling, with the latest data showing it contracted for the first time in three years in the first quarter, ramping up the chances of a recession.
EMarketer analyst Sky Canaves told Reuters that “less affluent consumers are most vulnerable to the impact of inflation, and one of the first areas where they’ll cut back is dining out.”
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| MCD | MCDONALD’S CORP. | 314.88 | -4.45 | -1.39% |
| SBUX | STARBUCKS CORP. | 81.12 | +1.07 | +1.34% |
| CMG | CHIPOTLE MEXICAN GRILL INC. | 50.41 | -0.07 | -0.15% |
| DPZ | DOMINO’S PIZZA INC. | 484.82 | -5.54 | -1.13% |
During the company’s earning call, McDonald’s CEO Chris Kempczinki said geopolitical tensions “added to the economic uncertainty and dampened consumer sentiment more than we expected” during the first three months of the year.
McDonald’s had “expected global QSR industry traffic would be down in the first quarter,” but it decreased “more than we anticipated” in America and “several” other large markets, he said.
In the U.S. specifically, Kempczinski said the industry’s traffic from low-income consumers “was down nearly double-digits” and traffic from middle-income fast-food eaters “fell nearly as much.”
“However, traffic growth from the high-income cohort remains solid, illustrating the divided U.S. 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,” he said.
Kempczinski said he believes McDonald’s “can weather these difficult conditions better than most” and “expect to outperform our competitors by harnessing the strength of our brand and the power of our global scale.”
Value and affordability are “paramount in an environment like this,” he said, adding that the company is also focusing on new food innovations and marketing to draw in consumers.
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The company’s $5 meal deal will remain on the menu through the rest of the year as part of its value menu offerings, CFO Ian Borden told analysts and investors.
In late April, executives at Chipotle, another fast-food chain, also noted a “slowdown in consumer spending” had presented a headwind in the first quarter as it reported its own quarterly financial results.
“In February, we began to see that the elevated level of uncertainty felt by consumers starting to impact their spending habits,” CEO Scott Boatwright said. “We could see this in our visitation study where saving money because of concerns around the economy was the overwhelming reason consumers were reducing the frequency of restaurant visits.”
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He said that contributed to a slowdown in the company’s “underlying transaction trends” and had continued into April.
Chipotle’s comparable restaurant sales experienced a 0.4% decrease in the first quarter.
Reuters contributed to this report.
