Lower-income consumers are increasingly dissatisfied with the menu offerings at McDonald’s, as revealed during the company’s latest earnings call on Wednesday. Chief Executive Christopher Kempczinski reported a significant decline in traffic among this demographic, with visits dropping “nearly double digits” in the most recent quarter. This downturn reflects the heightened economic pressures faced by lower-income customers, including rising costs of groceries, housing, and child care.
Kempczinski noted that these economic strains have affected how these consumers spend their money and their overall outlook. In contrast, higher-income customers appear to be less impacted, with their traffic increasing by “nearly double digits” during the same period. This growing divergence in consumer behavior is a trend being observed across the industry, where McDonald’s reported a slight decrease in same-store sales growth from 2.5% to 2.4% in the U.S., although total global sales rose by 3.6%, reaching $36 billion—a notable 8% increase year-over-year.
This shift highlights a wider trend of economic bifurcation among U.S. consumers. Economists have pointed out that while affluent Americans continue to boost consumer spending, lower-income households are pulling back on dining out and discretionary purchases due to stagnant wage growth and escalating living costs. Similar trends have been noted among other retailers, such as Chipotle, Walmart, and Dollar General, which have reported that their core low-income customers are reducing spending.
In response to the challenges faced in retaining lower-earning customers following price increases, McDonald’s has been exploring ways to strike a balance between maintaining profitability and appealing to this demographic. Notably, the average price of menu items has risen by 40% from 2019 to 2024, attributed to increased operational costs including wages and food materials.
To entice price-conscious consumers back, McDonald’s has unveiled new value meal deals. The return of its popular Monopoly promotion, along with the introduction of new $5 and $8 extra value menu options and $2.99 snack wraps, is part of an effort to regain the trust and spending of lower-income customers.
As the fast-food landscape grows more competitive, particularly with sit-down restaurants like Chili’s offering greater perceived value, McDonald’s aims to navigate these challenges by appealing to a broader audience while managing the complexities of price sensitivity among their customer base.