Fast food giant McDonald’s fell significantly in the first quarter than increased store traffic as diners became more cautious due to economic uncertainty.
The decline was most notable in the US, with sales at the same store (where they have been open for at least a year) down 3.6%, the company said in its revenue report. Analysts expected a slight 1.7% decline.
This is the steepest drop McDonald’s has seen in the US since the pandemic forced many locations in 2020.
CEO Chris Kempczinski told investors that low- and middle-income consumers who cut fast food from January to March are inflation and economic concerns being key factors behind the recession.
Traffic from consumers making under $45,000 a year fell by just double digits, while traffic from middle-income consumers fell by about the same.
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According to Kempczinski, only those who earned more than $100,000 continued to eat regularly.
“We believe McDonald’s will be able to get through these difficult situations better than most,” Kempczynski said in a call with investors during a conference call Thursday. “But we are not immune to the volatility in the industry or the pressures that consumers face.”
Other fast food chains have reported similar struggles.
Yum Brands, which owns Taco Bell, KFC, Habit Burger & Grill and Pizza Hut, announced a 2% drop in the same US store sales in the first quarter.
“In the US, traffic across the Quick Service Restaurant industry from a low-income consumer cohort fell almost double digits from the previous year’s quarter,” Kempczinski Sais said. “Unlike months ago, QSR traffic from middle-income consumers has dropped almost equally, but it clearly shows that economic pressure on traffic has increased.”
The Associated Press contributed to this report.
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