Fast-food giant McDonald’s saw a bigger-than-expected drop in store traffic during the first quarter, as diners became more cautious due to economic uncertainty.
The decline was most noticeable in the U.S., where same-store sales — those at locations open for at least a year — fell by 3.6%, the company revealed in its earnings report. Analysts had anticipated a smaller decline of 1.7%.
This is the steepest drop McDonald’s has seen in the U.S. since 2020, when the pandemic forced many locations to close.
CEO Chris Kempczinski told investors that inflation and economic concerns were key factors behind the downturn as lower- and middle-income consumers cut back on fast food during the January-March period.
Traffic from consumers earning $45,000 per year or less dropped by double digits, while traffic from middle-income consumers fell nearly as much.
Only those making $100,000 or more continued to dine out regularly, Kempczinski said.
“We believe McDonald’s can weather these difficult conditions better than most,” Kempczinski said during a Thursday conference call with investors. “However, we’re not immune to the volatility in the industry or the pressures that our consumers are facing.”
Other fast-food chains have reported similar struggles.
Yum Brands, which owns Taco Bell, KFC, Habit Burger & Grill, and Pizza Hut, announced a 2% drop in U.S. same-store sales for the first quarter.
“In the U.S., overall quick-service restaurant industry traffic from the low-income consumer cohort was down nearly double digits versus the prior year quarter,” Kempczinski sais. “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.”
The Associated Press contributed to this report.
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