:max_bytes(150000):strip_icc()/GettyImages-2225896399-a52d0de8201d4f2e8c87253841caba12.jpg "McDonald’s CEO Says ‘Value Matters to Everyone’ as Wealthy Customers Stream In")
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Key Takeaways
- McDonald’s saw a surge in traffic from high-income Americans, while sales to low-income households continued to trail off, CEO Christopher Kempczinski said.
- The company will continue to lean into value, which Kempczinski says appeals to people across the economic spectrum.
McDonald’s is becoming a stomping ground for the well-to-do.
The burger chain’s emphasis on inexpensive meals has attracted more high-income Americans, the company said, though it hasn’t stemmed a two-year slide in traffic from low-income consumers. Traffic among high-earners increased by nearly double digits last quarter, while visits from low-income households fell by a similar amount, CEO Christopher Kempczinski said on a conference call Wednesday.
The chain will continue to concentrate on bargains, Kempczinski said. McDonald’s (MCD) brought back Extra Value Meals this fall and its $2.99 Snack Wrap this summer, after previously rolling out $5 Meal Deals.
“There’s this idea that value only matters to low-income [consumers]. But value matters to everybody,” Kempczinski said, according to a transcript made available from AlphaSense.
Why This News Matters to Investors
Lowering prices and offering deals may not be enough to bring out low-income households, as McDonald’s executives said earlier today. Growing cost-of-living expenses may have left some with significantly less money for non-essentials.
Other brands with a reputation for serving the working class are also seeing a similar shift. Families with six-figure incomes have been flocking to Walmart (WMT). Dollar Tree (DLTR) and Dollar General (DG) are drawing more high-earners, as are thrift-shops and second-hand stores like Savers Value Village (SVV). Unease about the economy may be compelling wealthier Americans to save, including by trading down to less expensive food and fashion options, analysts and companies have said.
Meanwhile, restaurants are reporting more caution among some customer groups—including younger Americans, Cava (CAVA) executives said yesterday.
Comparatively inexpensive options have grown popular at McDonald’s. Extra Value Meals account for about 30% of all domestic transactions, CFO Ian Borden said, and one-fifth of all McDonald’s customers ordered a Snack Wrap during the first month of its return.
Business improved as McDonald’s deepened the discount available in the U.S., executives said. The company reported a 2.4% year-over-year increase in domestic comparable-restaurant sales last quarter.
McDonald’s reported $3.18 in diluted earnings per share on nearly $7.08 trillion in revenue. Analysts expected a bit more—$3.33 in earnings per share on nearly $7.09 trillion in revenue, according to consensus estimates from Visible Alpha. Still, shares of McDonald’s were recently up 2%, putting them up some 5% for 2025.
McDonald’s expects U.S. comparable-restaurant sales to grow in the fourth quarter, Borden said. Still, the chain believes low-income consumers may remain wary until there’s a meaningful shift in the macroeconomic environment and the cost of living, Kempczinski said.
