McDonald’s sees global sales drop due to tariff uncertainty

'Less affluent consumers are most vulnerable to the impact of inflation, and one of the first areas where they’ll cut back is dining out,' said EMarketer analyst Sky Canaves.

McDonald’s posted a surprise drop in first-quarter global sales, as demand from cash-strapped diners in the US and Europe faltered on uncertainty sparked by chaotic tariffs.

The world’s largest fast-food chain is navigating the “toughest of market conditions”, CEO Chris Kempczinski said, as restaurant visits by lower- and middle-income customers fell in double-digit range from last year.

The results echoed warnings from restaurant operators Domino’s Pizza, Chipotle Mexican Grill, and Starbucks that consumers were spending less to dine out — as inflation and bleak economic outlook dent consumer confidence.

Tariff flip-flops by the Trump administration have worsened wallet pressures and disrupted businesses, threatening to push up costs and upend supply chains.

The US economy is struggling, with latest data showing it contracted for the first time in three years in the first quarter, ramping up the chances of a recession in 2025.

“Less affluent consumers are most vulnerable to the impact of inflation, and one of the first areas where they’ll cut back is dining out,” said EMarketer analyst Sky Canaves.

Value menu offers

The company has tried to spur demand in the US by ramping up its value menu offers such as the $5 meal deal, similar to its rivals.

Executives said McDonald’s will offer the $5 meal throughout 2025. Still, global comparable sales fell 1%, while analysts were expecting a 0.95% rise.

In the US, McDonald’s biggest market, it slumped 3.6% — steeper than a 0.5% drop estimated by analysts. It was the biggest drop since the covid pandemic in 2020.

However, its business segment, where restaurants are operated by local partners, stood out, with a 3.5% growth compared to last year, led by a sales recovery in the Middle East and Japan.

• Reuters