It’s a new year, and McDonald’s (MCD) , the largest fast-food chain in the U.S., is still suffering from concerning customer behavior, and its CEO is sounding the alarm on why this trend continues to grow legs.
In McDonald’s first-quarter earnings report for 2025, it revealed that its U.S. comparable sales decreased by 3.6% year-over-year during the quarter. This contributed to the company seeing a 3% year-over-year decline in its operating income, which is profit after paying operating expenses.
💵💰Don’t miss the move: Subscribe to TheStreet’s free daily newsletter 💰💵
The dip in sales comes after McDonald’s made several bold attempts to win back customers. For example, the fast-food chain recently unveiled its $5 Meal Deal and “Buy One, Add One for $1” deal. It also just hyped the return of fan-favorite menu items such as McCrispy Strips and the Snack Wrap.
Related: McDonald’s makes a surprising move to win back frugal customers
However, according to recent data from Placer.ai, foot traffic in McDonald’s stores declined by 2.6% during the first few months of the year, which shows that consumers aren’t rapidly changing their tune.
Last year, McDonald’s faced backlash from consumers for hiking menu prices. In October, the restaurant chain also suffered an unsettling E. coli outbreak at multiple locations, which forced it to temporarily remove its Quarter Pounder from menus. So it is no surprise that McDonald’s is facing decreased consumer momentum.
A decline in McDonald’s sales is a trend that’s proving hard to stomach.
Image source: Lauren DeCicca/Getty Images
McDonald’s CEO sends stern warning about consumer behavior
During an earnings call on May 1, McDonald’s CEO Chris Kempczinski said that consumers are reducing their spending on fast food more than expected.
“We entered 2025 knowing that it would be a challenging time for the QSR industry due to macroeconomic uncertainty and pressures weighing on the consumer,” said Kempczinski. “During the first quarter, geopolitical tensions added to the economic uncertainty and dampened consumer sentiment more than we expected.”
He also flagged that low-income consumers aren’t the only ones pulling away from fast food, which illustrates the “impact of inflation and heightened anxiety about the economic outlook.”
Related: Domino’s Pizza suffers a startling loss as customers switch gears
“Overall QSR (quick-service restaurant) industry traffic from the low-income consumer cohort was down nearly double digits versus the prior year quarter,” said Kempczinski. “Unlike a few months ago, QSR traffic from middle-income consumers fell nearly as much, a clear indication that the economic pressure on traffic has broadened. However, traffic growth from the high-income cohort remained solid.”
Kempczinski also said that consumers are even starting to avoid buying breakfast, which is a crucial part of McDonald’s menu.
“Morning now is a place that you’re seeing people choosing either to skip breakfast or they’re choosing to eat at home for breakfast,” said Kempczinski.
McDonald’s CEO addresses pricing
During the quarter, while McDonald’s did notice that its $5 Meal Deal has been attracting customers, its “Buy One, Add One for $1” deal hasn’t been as successful.
“When you look at the Buy One, Add One for $1, I’d say our view on that is it’s performing okay, but frankly, it’s not driving nearly the amount of incrementality that we’re seeing with the buy one or with the $5 Meal Deal,” said Kempczinski.
More Food + Dining:
Domino’s Pizza unveils generous deal amid alarming consumer trendSteak ‘n Shake’s beef tallow fries aren’t as healthy as they appearThe Cheesecake Factory makes bittersweet changes to its menu
The increased consumer momentum surrounding fast-food deals comes as fast-food prices have increased by roughly 47% over the past decade. As prices rise, consumers are increasingly cutting fast food out of their budgets.
According to a survey from Datassential late last year, 46% of U.S. consumers have scaled back their spending on restaurant meals and dining out due to inflation and the increased cost of living. Also, 31% said they are opting to cook food at home in order to save money.
Amid this startling trend, McDonald’s will continue to focus on providing customers with “value and affordability” and will ensure that menu prices moderate in line with inflation as it comes down.
“I think if you look at what’s been going on with menu prices right now, because the inflation has come down, and we’re not nearly seeing as inflationary an environment as we saw certainly last year and into 2023, you’re not seeing the big moves on core menu that you saw previously,” said Kempczinski. “And I would expect that that’s going to continue.”
Related: Veteran fund manager unveils eye-popping S&P 500 forecast
