McDonald’s Made It Official: Consumers Have Reached Their Limit
McDonald’s warned that customers might be getting sick of price hikes. It was right. Sales fell year-over-year for the first time since 2020.
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The big red clown shoe has dropped.
McDonald’s published its second-quarter results on Monday, revealing that sales had fallen year-over-year for the first time since 2020, ticking down by 1%. McDonald’s warned in April that customers might be getting sick of price hikes. It was right — and it’s not just fast-food price hikes. Consumers are finally reaching the end of their rope.
I’m Hikin’ It
The last few years have been a white-knuckle inflation ride, but even accounting for the high overall inflation rates Jerome Powell has been trying to wrestle into submission, McDonald’s has been jacking up prices higher than the sodium content in a Big Mac. In late May, McDonald’s USA President Joe Erlinger pushed back on claims from both social media and the GOP that the average menu item was up more than 100% since 2019. Nonsense, said Erlinger: It’s only up 40%. For reference, the cumulative rate of inflation from 2019 to 2024 is 22.9%.
Now McDonald’s finally seems to be conceding that to keep people coming back, it will need to bring some value back down the chain:
- The fast-food behemoth launched a limited-time $5 meal deal at the end of June that was supposed to only last for one month; last week, McDonald’s extended the deal to run through August.
- The meal deal had a fairly instantaneous knock-on effect, with fast-food rivals including Burger King and Starbucks releasing their own deals.
MacroDonald’s: The Financial Times reported on Sunday that a growing number of companies and investors across a range of sectors have noticed the same thing: consumers don’t have it in them anymore. It’s not just in the US, either. Last week, European airline Ryanair warned that it was coming up against consumer resistance on price.
