McDonalds Faces Biggest Drop in US Sales Since Pandemic

McDonald’s has reported its steepest quarterly decline in US same-store sales since the pandemic, as the impact of geopolitical tensions and a weakening American economy takes its toll on consumer confidence. The fast-food giant revealed a 3.6 per cent drop in US same-store sales for the first quarter of 2025, marking its most significant fall since 2020.

The tough conditions come amid President Trump’s ongoing trade war, which has fuelled uncertainty around price increases and potential job losses. While McDonald’s CEO Chris Kempczinski acknowledged the brand’s resilience in the face of industry challenges, he cautioned that the pressures on consumers were broader and deeper than anticipated. “We entered 2025 knowing that it would be a challenging time for the quick service restaurant industry due to macroeconomic uncertainty,” Kempczinski said, adding that a combination of inflation, global instability, and declining consumer sentiment has weighed heavily on the company’s US operations.

Globally, McDonald’s fared slightly better than in its domestic market, with international same-store sales showing a marginal decline of 1 per cent. Analysts on Wall Street had previously estimated a 1 per cent growth, further highlighting the extent of the economic downturn’s impact across the business. Revenues for the first quarter dropped 3 per cent to $5.96 billion, with net income falling to $1.87 billion.

In response to the downturn, McDonald’s expanded its value menu offerings, including limited-time meal deals targeted at cost-conscious consumers. These measures align with strategies pursued by rivals such as Domino’s, Chipotle, and Starbucks, which are also experiencing reduced demand as Americans pull back from dining out. Low-income customers, in particular, have curtailed spending on fast food by nearly double digits compared to the previous year. The downturn, however, has spilled over to middle-income earners as well, adding further pressure on the entire segment.

Despite the bleak domestic outlook, McDonald’s continues to demonstrate resilience in certain international markets. Sales in the Middle East and Japan, where restaurants are operated by local partners, delivered a 3.5 per cent increase compared to the same period last year. This recovery is helping to soften losses in other regions and highlight the importance of its global footprint.

The contraction of the US economy, which shrank in Q1 2025 for the first time in three years, has further compounded the pressure on consumer behaviour. As inflation continues to hit household budgets, dining out is increasingly becoming a luxury for many. Consumer confidence in the US fell to its lowest level in nearly five years in April, signalling an extended period of economic instability. McDonald’s stock reflected the sector’s troubles, dipping by 0.4 per cent to $318.50 during Thursday afternoon trading in New York. “McDonald’s is better positioned than most of our competitors to weather this storm,” Kempczinski stated, though he warned the company is not immune to industry volatility.

Moving forward, analysts and industry experts will watch closely to see whether McDonald’s efforts to revitalise its brand and reinforce customer value will be sufficient to offset the ongoing macroeconomic challenges. With no immediate relief in sight, the coming quarters are likely to test the limits of the fast-food sector’s adaptability in a volatile global market.