The most important meal of the day is also shaping up to be the most skipped meal of the day, at least according to two of the country’s largest fast-food chains.
McDonald’s and Wendy’s last week, during their respective earnings calls, said they’re seeing sluggish breakfast sales. The companies attributed the trend to heightened economic uncertainty and pressures facing low-income consumers.
“There is a lot of anxiety and unease with that low-income consumer,” McDonald’s CEO Christopher Kempczinski said on the company’s earnings call on Aug. 6.
Despite wage gains, real incomes are down for low-income consumers, who are facing a lot of financial stress, the CEO said, citing President Trump’s tariffs as a potential contributor.
“So real incomes are down with the low-income consumer, that absolutely is going to put pressure on visits into the [quick-service retail] industry. Second thing is there is a lot of anxiety and unease with that low-income consumer. I think we could all speculate the reasons for that, probably tariffs and the impact that, that might have, questions around employment situation,” Kempczinski said.
According to Kempczinski, the decline in traffic from low-income consumers — a core demographic for fast-food restaurants — is an industrywide trend, with breakfast menus across the quick service industry taking the biggest hit.
Why skip breakfast?
As many Americans rein in discretionary spending, industry analysts and executives say one of the first items on the chopping block is breakfast. Instead of heading to the drive-thru for a breakfast sandwich, more Americans are opting to grab something at home, or skip the meal altogether.
“When consumer uncertainty increases and consumers choose to eat another meal at home, breakfast is often the first place that they do that with,” Wendy’s interim CEO Ken Cook said on the company’s earnings call Aug. 8.
That’s a stark contrast to the breakfast boom fast-food chains have enjoyed for nearly a decade, which led many restaurants over the years to expand their early morning offerings. Starbucks, which launched egg bites in 2017, now has a breakfast menu with 12 separate items. Wendy’s reintroduced breakfast in 2020 and offers 10 items with eggs.
The cost of fast food has also skyrocketed over the past decade, according to 2024 report by FinanceBuzz. The personal finance site found that the price of a McDonald’s Quarter Pounder with Cheese meal from McDonald’s more than doubled in price from $5.39 in 2014 to $11.99 in 2024.
To be sure, reports of slowing traffic at fast-food chains precede the recent decline in breakfast sales. On an earnings call in May 2024, McDonald’s CEO Kempczinski expressed “heightened anxiety” about how the economy was weighing on lower- and middle-income Americans. During that same time, the CEO of Dine Brands, which owns Applebee’s and IHOP, told CNBC that casual restaurants were also seeing a drop in low-income customers.
Still, not all fast-food chains are experiencing declines in breakfast traffic. Both Starbucks and Dunkin’ told CBS MoneyWatch they’ve seen success with breakfast sales.
Reached for comment by CBS MoneyWatch, both McDonald’s and Wendy’s pointed to their earnings reports.
What falling breakfast sales say about the economy
Experts say that American consumers’ decision to skip out on breakfast points to myriad economic pressures facing low- and middle-income consumers ranging from sky-high credit card interest rates to inflation.
“The fact that the breakfast day part is slowing now, in our opinion, speaks to heightened economic uncertainty and the lower consumer confidence that we’ve seen, and that really escalated as tariff rhetoric came into the picture,” Matthew Todd, a director at S&P Global Ratings, told CBS MoneyWatch.
“The consumer is very value focused, discerning and selective about how they’re spending. I think we would say we think breakfast is the easiest meal to cut because consumers can eat something quickly,” Todd said.
Mark Zandi, chief economist of Moody’s Analytics, told CBS MoneyWatch that low- and middle-income Americans have been spending more cautiously since the end of last year, in part due to a “weakening” labor market. “That’s adding to their nervousness and their caution so far this year,” he said.
The most recent jobs report showed hiring slowed in July. The Labor Department also sharply revised job growth for May and June down by a combined 258,000, a sign that hiring was weaker than previously estimated. With the revisions, the U.S. added 19,000 jobs in May and 14,000 in June.
Experts also told CBS MoneyWatch that low-income consumers’ purchasing power is already under pressure due to inflation — something they said tariffs could exacerbate. The Consumer Price Index in July showed inflation held steady at 2.7% on an annual basis. Restaurant prices are up 3.9% since July of last year and 0.3% from June.
“If they have to spend more to buy a pair of shoes or get their hair cut, they’re gonna have less to spend on everything else again, including breakfast at a fast-food restaurant,” Zandi said.
Mary Cunningham is a reporter for CBS MoneyWatch. Before joining the business and finance vertical, she worked at “60 Minutes,” CBSNews.com and CBS News 24/7 as part of the CBS News Associate Program.
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