McDonald’s reported its sharpest U.S. sales drop in nearly five years, as consumer pullback and rising costs from new tariffs strain the fast-food giant’s bottom line.
At a Glance
- U.S. same-store sales declined 3.6% in Q1 2025
- Global revenue fell short at $5.96 billion
- Economic contraction and new tariffs dampen consumer demand
- CEO Kempczinski cites pressure on lower-income customers
- McDonald’s rolls out new value options to counter slowdown
Sales Slump Amid Economic Pressures
McDonald’s experienced a 3.6% decline in U.S. same-store sales in the first quarter of 2025, marking its steepest domestic drop since mid-2020. Globally, revenues dipped to $5.96 billion, falling short of analyst forecasts, according to NBC News.
CEO Chris Kempczinski acknowledged the difficult climate, pointing to “heightened anxiety” over inflation, tariffs, and a shrinking economy. He stressed that lower-income and middle-class consumers are increasingly sensitive to price changes and pulling back on discretionary spending. “We’re not immune to the volatility,” he said, “especially as our core customers feel more financial pressure.”
Watch NBC’s full analysis in “McDonald’s Sees Worst U.S. Sales Drop Since COVID – What’s Going Wrong?”.
Tariffs and Tight Wallets
Adding to consumer hesitation, new tariff policies enacted by the Trump administration have increased input costs for major brands. McDonald’s is one of several American companies—including Intel and Adidas—reporting higher expenses due to tariff hikes. These changes have rippled through the supply chain, further squeezing profit margins and limiting promotional effectiveness, as detailed by the BBC.
In response, McDonald’s is ramping up its focus on value meals and affordability. The company is testing new price-conscious menus aimed at retaining cost-sensitive customers. Promotions tied to pop culture events, such as a Minecraft movie-themed campaign, have had limited impact in offsetting broader economic headwinds.
Eyes on the Recovery
The U.S. economy contracted by 0.3% in Q1 2025, according to government data, exacerbating fears of a mild recession. As McDonald’s navigates these challenges, the company is banking on global resilience. International markets, particularly Japan and the Middle East, delivered positive growth, helping buffer some of the domestic downturn.
Still, analysts warn that unless consumer sentiment improves and inflationary pressures ease, even value-focused chains like McDonald’s may continue to face headwinds. For now, the company appears to be tightening its strategy, aiming to weather the storm through operational efficiency and sharper pricing initiatives.
