Jamie Spencer
McDonald’s Faces Early Struggles Amid Economic Concerns
McDonald’s experienced a challenging first quarter, with same-store sales showing a decline in the U.S. due to a weak start to the year and broader economic concerns. Ian Borden, McDonald’s CFO, acknowledged that the first quarter would likely be the low point for the company’s same-store sales. Additionally, the introduction of broad tariffs by President Donald Trump heightened pricing concerns for consumers, adding to the pressures facing the fast-food giant.
McDonald’s Response: Value Meals and Popular Menu Items
In response to declining sales, McDonald’s has shifted focus to value meals and buzz-worthy menu items. The return of fan favorites, like the snack wraps, and the introduction of new McCrispy Chicken Strips, have been central to the company’s strategy. Early results from the second quarter show promise, with McCrispy Chicken Strips selling well even before official advertisements began. Additionally, McDonald’s partnered with the video game franchise Minecraft to create exclusive meal tie-ins, which sold out of collectibles in just two weeks.
Value Meal Deals to Continue Through 2025
To further appeal to cost-conscious consumers, McDonald’s has decided to keep its $5 meal deal for the rest of 2025. This decision aligns with the company’s strategy of offering value while navigating an environment of softening consumer sentiment. According to CEO Chris Kempczinski, these strategies are helping to bring diners back, despite broader economic challenges. The company’s focus on delivering both affordability and novelty is beginning to pay off.
International Markets Show Mixed Performance
While McDonald’s U.S. operations have faced some struggles, international markets have delivered a mixed performance. The company’s international operated markets, which include major markets like Australia and France, saw a 1% drop in same-store sales. This segment accounts for roughly half of McDonald’s revenue. Analysts had expected flat same-store sales, reflecting the challenging environment McDonald’s faces globally. However, McDonald’s international developmental licensed markets division, which includes Japan, China, and Brazil, reported a 3.5% growth in same-store sales, slightly exceeding analyst projections of 3.2%.
McDonald’s Full-Year Outlook and Expansion Plans
Despite the mixed results, McDonald’s has reaffirmed its full-year outlook. The company plans to open 2,200 new locations worldwide and spend between $3 billion and $3.2 billion on capital expenditures. With net restaurant openings expected to boost systemwide sales growth by slightly more than 2%, McDonald’s is continuing its expansion efforts, both domestically and internationally. This growth is seen as a key component of the company’s strategy to overcome current economic challenges and return to growth in the coming quarters.
