McDonald’s Faces Sales Slump Amid Economic Pressures but Banks on New Strategies

McDonald’s has reported a mixed financial performance for the first quarter, highlighting a concerning dip in U.S. same-store sales for the second consecutive time. The 3.6% drop represents the largest domestic decline since the early months of the Covid-19 pandemic in 2020, when a significant 8.7% plunge was recorded during widespread lockdowns. The chain attributed this recent decline to both severe weather and a more cautious consumer base.

Analysts had anticipated a smaller decrease in U.S. same-store sales—just 1.7%—but the results fell short of expectations. CEO Chris Kempczinski explained that traffic among low-income customers dropped sharply compared to the previous year. More concerning, he noted that middle-income diners were also pulling back at nearly the same rate, signaling that economic stress is now impacting a broader range of consumers in the quick-service restaurant (QSR) sector.

Executives emphasized that McDonald’s draws a large number of low- and middle-income customers compared to other fast-food brands. While high-income individuals continue to dine out, their contributions are not sufficient to compensate for the reduction in visits from more budget-conscious groups. The overall same-store sales across all markets dropped by 1% for the quarter, a decline partly influenced by the absence of leap day in 2025.

From a financial standpoint, the company reported earnings per share of $2.67, slightly above Wall Street’s expectations of $2.66. However, revenue came in at $5.96 billion, missing the projected $6.09 billion. Net income for the quarter fell to $1.87 billion, or $2.60 per share, compared to $1.93 billion, or $2.66 per share, in the same period last year. The company noted a 3% decline in net sales, aligning with the broader sales trend.

Looking ahead, McDonald’s is taking steps to reverse this downward trend. CFO Ian Borden had previously predicted that Q1 would be the lowest point in same-store sales for the year. Since then, the company has launched several new initiatives, including the return of popular items like snack wraps and value meals aimed at budget-conscious consumers. Early signs suggest these strategies are effective, with the newly introduced McCrispy Chicken Strips performing well even before formal advertising began.

In addition to product innovations, McDonald’s is capitalizing on strategic partnerships to drive engagement. A collaboration with the Minecraft video game franchise led to rapid sellouts of promotional items tied to a major movie release. Furthermore, the company announced that its popular $5 meal deal will remain available throughout 2025 as part of its broader strategy to retain price-sensitive customers.

Internationally, McDonald’s same-store sales slipped 1% in key markets such as Australia and France, falling short of analysts' projections of flat growth. However, its licensed markets division, including countries like Japan, China, and Brazil, posted a 3.5% rise—slightly above the expected 3.2%. Despite the challenging environment, McDonald’s reaffirmed its full-year outlook, including plans to open 2,200 new locations and invest up to $3.2 billion in capital expenditures. The company expects these expansion efforts to contribute to a systemwide sales growth of just over 2%.