McDonald’s reported mixed results for the first quarter, revealing its sharpest domestic decline in same-store sales since the early months of the COVID-19 pandemic. U.S. same-store sales fell by 3.6%, a larger drop than the 1.7% decline analysts had forecast. This marks the second consecutive quarterly drop and the worst since the 8.7% plunge recorded in Q2 of 2020, when pandemic lockdowns began. The company attributed the downturn to poor weather conditions and growing consumer caution, particularly among lower- and middle-income groups.
CEO Chris Kempczinski noted that traffic from low-income consumers across the quick-service restaurant sector fell nearly by double digits, and more recently, middle-income consumers have shown similar pullback. McDonald’s has a higher concentration of customers from these income brackets compared to its competitors, leaving it more vulnerable to economic pressures. Although high-income consumers continue to visit McDonald’s, their spending hasn’t compensated for the broader decline.
Globally, same-store sales dipped 1% for the quarter, influenced partly by the extra day in last year’s leap year, which created a tougher comparison. International operated markets like France and Australia saw a similar 1% decline, slightly below analysts’ expectations. In contrast, international developmental licensed markets, including Japan, China, and Brazil, reported a 3.5% increase in same-store sales, slightly exceeding forecasts.
In terms of financial performance, McDonald’s reported adjusted earnings per share of $2.67, just above the expected $2.66. However, revenue came in at $5.96 billion, missing estimates of $6.09 billion. Net income stood at $1.87 billion, down from $1.93 billion the previous year. The company’s leadership had anticipated a weak Q1, and CFO Ian Borden earlier described it as likely the low point for the year.
Despite the downturn, McDonald’s is optimistic about its recovery strategy. The company is introducing value-driven offerings and trending menu items to regain foot traffic. New products like McCrispy Chicken Strips are performing well even without formal advertising. Promotional partnerships, including a Minecraft-themed meal, have also sparked consumer interest. Looking ahead, McDonald’s plans to maintain its $5 meal deal throughout 2025 and continue expanding globally, with 2,200 new locations and up to $3.2 billion in capital spending.
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