McDonald's U.S. Sales Slow as Consumers Spend More Cautiously

Key facts

• McDonald's U.S. same-store sales declined 3.6% in the latest quarter, the largest drop since Q2 2020.
• The company cited consumer uncertainty and a pullback in discretionary spending, particularly among middle- and low-income diners.
• Traffic among lower-income groups declined, with some consumers skipping meals or eating at home.
• McDonald's revenues missed forecasts for the third time in four quarters.
• The company maintained its full-year outlook and plans to open 2,200 new locations.
• Shares fell nearly 2% following the announcement.

McDonald's reported its steepest quarterly sales decline in the U.S. since the second quarter of 2020, with same-store sales falling 3.6%, significantly missing analyst expectations of a 1.7% decrease. The fast-food giant attributed the slowdown to consumer uncertainty and a pullback in discretionary spending, particularly impacting middle- and low-income diners whose traffic dropped by nearly double digits. Executives noted that some consumers are opting to skip meals like breakfast or eat at home to save money.

This marks the third time in four quarters that McDonald's revenues have fallen short of forecasts. Despite the weak sales, the company maintained its full-year financial outlook, projecting sales growth of slightly over 2% from plans to open 2,200 new locations globally. The company also highlighted the success of promotional tie-ins and refreshed value offerings.

Other restaurant chains, including Chipotle, Domino's, and Starbucks, have also reported slowing sales, indicating a broader trend of consumers cutting back on non-essential spending. McDonald's shares closed down nearly 2% following the announcement.