Despite a heavy push for McValue meals to draw cost-conscious customers feeling squeezed by the affordability crunch, fast-food giant McDonald’s missed its sales growth expectations for the U.S. market.
In mid‑April, McDonald’s expanded its McValue platform in the U.S., adding everyday menu items priced under US$3, such as the $2.50 McDouble and a $1.50 Sausage McMuffin. In addition, there is a US$4 breakfast meal deal.
In January, McDonald’s Canada started offering its McValue Meal to Canadian customers for $5 and a small coffee for $1 in a bid to attract cost-conscious consumers.
Comparable sales in the U.S. market for McDonald’s grew 0.8 per cent, below analysts’ estimates of a 1.06 per cent rise. The pace of growth in the U.S. was 2.5 per cent a year ago.
Globally, comparable sales rose 1.3 per cent, compared to a 3.8 per cent jump a year ago.
CEO Chris Kempczinski said weak promotion of value deals and a pullback in digital deals, including its buy-one-add-one promotion, led to a drop in visits from customers, which accounted for about two-thirds of the traffic shortfall in the quarter.
“We don’t have a strategy problem, we simply didn’t execute at the level we needed to in the second quarter,” Kempczinski said on the earnings call.
The value meals were supposed to “rejuvenate” McDonald’s core base of low-income customers, said retail analyst Bruce Winder.
“They’re continuing to see a weakness in that demographic, just based on elevated fuel prices we’ve seen because of the conflict in the Middle East and other upward inflationary pressures, particularly in the U.S. market,” Winder said.
The value meals have buffeted McDonald’s against some of the worst impacts of the economy, said University of Guelph economist Mike von Massow.
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“This would have been worse in the absence of value meals,” he said.
“Beef, which is the component of the burgers that McDonald’s sells, is one of the drivers of food price inflation,” he added.
Canada’s “K-shaped economy” is also reflected in the restaurant sector, a recent report by Restaurants Canada showed. While the restaurant industry overall has been hit by Canadians tightening their purse strings, fast-food restaurants have been hit a lot harder.
While full-service restaurants saw real sales growth of 4.1 per cent, quick-service restaurants saw a modest sales growth of 1.6 per cent by contrast.
Restaurant Brands International, the parent company of Tim Hortons, Burger King, Popeyes and Firehouse Subs, reported a 27.4 per cent dip in profits in 2025 compared to the year before.
This may come down to how Canadians eat out when the going gets tough financially, von Massow said.
“A fast-food place competes with a home-prepared meal,” von Massow said.
“If you can buy some patties on sale, cook them on the grill or the barbecue and do it at home, you are likely going to save some money,” he said.
Instead, eating out has become a “rare treat” for many. Instead of going out regularly to fast-food restaurants, many are choosing to be more discerning with how they spend their money.
“It’s becoming a little bit more of a treat and a little less of the regular thing we do on the way to baseball practice or dance recital,” he said.
The falling sales at McDonald’s could also have to do with slowing service times, owing to an expanded menu, said Concordia University economist Moshe Lander.
“That menu has expanded so fast and so much that it is slowing down service times. When people go to McDonald’s, they want to be in and out quickly,” he said.
The phenomenon of “shrinkflation,” where brands reduce portion sizes to save costs, may also be a contributing factor.
While McDonald’s is not the only fast-food chain accused of shrinkflation by angry customers on social media, Lander said these accusations are bad for business.
“The whole point of McDonald’s was that it’s cheap calories and a lot of them. You should get up from the table not feeling the need to go snack,” Lander said.
As the cost-of-living crisis continues to squeeze customers, Canadians will likely be more cautious about eating out, Winder said.
A TransUnion survey released Tuesday found that while Canadian households were optimistic about their financial health improving, they continue to employ “defensive spending behaviours.”
More than half (51 per cent) said that they would cut back in discretionary spending, like dining out, travel or entertainment. More than a quarter (26 per cent) said they would cancel their subscriptions and memberships.
“If you’re a consumer and gas prices go up, that takes money directly out of your disposable income. That money has to be found somewhere else. The easiest way to find it is through eating out at restaurants (less),” Winder said.
–With files from Reuters
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