McDonald’s isn’t immune to the volatility in the restaurant industry, according to CEO Chris Kempczinski. Guests are feeling a crunch, and that hasn’t been good for a brand like the burger giant, which over-indexes with lower-income and middle-income consumers.
U.S. same-store sales fell 3.6 percent in Q1, hurt by traffic that decreased more than expected. This comes after comps dropped 1.4 percent in Q4.
Overall QSR guest counts from low-income guests were down nearly double digits versus the prior year. Traffic from middle-income customers fell nearly as much, an indication that economic pressures have broadened, Kempczinski noted.
“There’s still a fair bit of uncertainty in the external environment, and we’re obviously focused on what we can control,” Kempczinski said during McDonald’s Q1 earnings call. “We feel really good about the lineup of activities that the U.S. business and the U.S. system have got for the rest of the year.”
READ MORE:
McDonald’s is Finally Regaining Momentum, Franchisees Say
McDonald’s Made a Big Growth Push in 2024
Did McDonald’s Answer the Call for Value Customers?
McDonald’s still drove a positive comp guest count gap to most competitors across most of its largest markets, suggesting its value platforms are resonating with consumers.
The McValue platform, launched in January, incorporates the $5 Meal Deal, a Buy One, Add One for $1 component, in-app exclusive digital offers, and local deals from franchisees. But current value offerings may change over time.
The $5 Meal Deal is proving effective at driving frequency, so it will remain on the menu through the end of 2025. However, the Buy One, Add One for $1 deal is only performing “OK,” Kempczinski said. It’s not driving anywhere close to the amount of incrementality it’s seeing with the $5 Meal Deal. In fact, the $5 Meal Deal is seeing incrementality that’s 10-13 points higher.
The CEO told investors, “The ultimate barometer for performance of a value program is its ability to drive incrementality.”
“Certainly there’s a strong take rate, but it’s not driving as much incrementality,” said Kempczinski, referring to the Buy One, Add One for $1 offer. “And so I think this is a question for the U.S. team with franchisees is, any value program requires an investment of margin dollars to get that established, and is the Buy One, Add One for $1 the best investment of margin dollars? I think there’s probably an opportunity to look for greater incrementality, but that’s going to be a conversation that happens in the U.S. And as to any pivots, that I think time will tell on that.”
McDonald’s leadership rejected the idea that sales are transferring to casual dining or fast casual. Keep in mind, Chili’s has heavily targeted McDonald’s, creating burgers that it believes are bigger, better, and better value for the dollar.
However, CFO Ian Borden insisted that consumers overall are visiting less because of inflationary pressures.
“I think when we get value and affordability right like the $5 Meal as we’ve talked about before, we know that it’s bringing consumers back in to visit us,” Borden said. “We know when they buy something like the $5 Meal, they’re visiting us more frequently and so we know if we can get value and affordability right, we can win in the context of what’s going on in the marketplace.”
With a sophisticated value identity now established, McDonald’s hopes to hook visitors with new marketing products and menu innovation.
In April, the brand released the Minecraft Happy Meal, which was planned for a four-week promotion, but the chain sold out of collectibles within 10 to 14 days. Visits to McDonald’s on Tuesday, April 1—when the Minecraft offer debuted—were 12.2 percent higher than the year-to-date average Tuesday visit count for 2025, according to foot traffic analytics platform Placer.ai. The following two Tuesdays elevated by 9.5 percent and 7.4 percent as well.
Additionally, the brand launched a national marketing campaign celebrating 50 years of breakfast at McDonald’s. It held a National Egg McMuffin Day and expanded the availability of bagel sandwiches nationwide to strengthen the morning daypart.
McDonald’s will follow up these marketing levers with the release of chicken strips next week. Some stores have begun selling the product without advertisement, and so far, the chain is seeing a favorable take rate. Additionally, the burger giant has teased the upcoming return of the Snack Wrap, set to release sometime before October.
“You’ve got to have strong value and affordability programs, but they have to be paired with great full-margin marketing and menu innovation,” Kempczinski said. “And when you do the two of those in combination, you get an outcome or result that is positive for the franchisee P&L, positive for our P&L, etc.”
With marketing and menu innovation, the next step is execution.
“The key for us now for the balance of the year is about execution,” Kempczinski said. “You’ve got an environment where there’s a pressured consumer, you’ve got to simply out-execute your competitors, and that means you’ve got to out-execute them on your value programs. You’ve got to out-execute them when it comes to marketing and menu innovation. And I think we’ve seen plenty of evidence that when you do that, there’s growth out there to be had, but certainly if your execution isn’t sharp in a challenging environment, you’re not going to be able to expect growth. And so that’s, I think, where we’re focused right now is about making sure we do world-class execution.”
McDonald’s finished Q1 with 13,569 restaurants in the U.S. and 30,187 stores internationally.
Same-store sales at International Operated Markets (i.e. Canada, the U.K., France, Germany) fell 1 percent in the first quarter. Same-store sales at International Developmental Licensed Markets (i.e. China, Japan, Middle East) increased 3.5 percent, primarily driven by the Middle East and Japan.
