02-05-2025
McDonald's quietly reveals plan to lure back customers after biggest sales drop since height of pandemic
McDonald's has revealed its game plan to win back customers after it suffered its biggest drop in US sales since lockdowns.
Sales at US restaurants fell 3.6 percent in the first quarter of the year, as inflation-weary Americans pulled back on spending amid economic uncertainty caused by Trump's new tariffs.
It was the biggest sales drop since the pandemic when lockdowns forced restaurant closures.
Bosses say that keeping deals going is their best bet to lure customers back. The fast food giant will extend its $5 Meal Deal through 2025 — ending fears among fans it would end soon.
The deal — which includes a choice of the McDouble or McChicken sandwich, small fries, four Chicken McNuggets and a small soft drink — was first introduced last summer.
The combo kicked off the 'value wars' among fast food rivals, who scrambled to compete with low cost combo deals of their own.
McDonald's CEO Chris Kempczinski said lower and middle-income consumers, worried about inflation and the economic outlook, cut back on fast food during the January-March period.
'We believe McDonald's can weather these difficult conditions better than most,' Kempczinski told investors on the Thursday earnings call.
'However, we're not immune to the volatility in the industry or the pressures that our consumers are facing.'
McDonald's saw same-store sales fall 1 percent globally in the first quarter compared to the same time last year.
Rivals are also feeling the effects of a consumer pullback with KFC and Pizza Hit both seeing falls in sales.
Chipotle also reported weaker-than-expected same-store sales in the first quarter and has set out a game plan for heading in to a downturn.
Building on the need to represent value-for-money, McDonald's also introduced a McValue menu, which allows customers to buy one item for $1 when they buy another full-priced item.
Kempczinski told analysts the $5 Meal Deal is resonating well with consumers but the McValue menu is not driving the additional sales the company expected, so it could soon see changes.
'While we may adjust our current McValue offerings over time, for the remainder of 2025, we'll continue to include everyday value meal deals starting at $5, given how the current $5 Meal Deal in particular has resonated with customers,' Kempczinski explained.
As well as damage to consumer's wallets policy flip-flops from the Trump administration have hurt businesses across industries, threatening to push up costs and upend supply chains.
The McDonald's $5 Meal Deal consists of a McDouble or McChicken, small fries, four-piece chicken nuggets, and a small drink for $5
The broader economy is showing signs of strain.
US GDP contracted last quarter for the first time in three years, raising fears of a 2025 recession.
The previous quarter had shown 2.4 percent growth, according to the Bureau of Economic Analysis.
The contraction doesn't reflect the full fallout from President Trump's sweeping 'Liberation Day' tariffs, which were rolled out in early April and partially reversed a week later.
