McDonald’s is feeling the impact of consumers cutting back on spending over inflation and recession concerns. The fast-food giant fell short of earnings expectations, citing industry “volatility.” It will continue offering its $5 meal deal introduced in June 2024 as a way to entice lower-income diners to return to its restaurants.

McDonald’s customers are losing their appetite for burgers and fries as mounting economic uncertainty has Americans cutting back on discretionary spending.

The fast-food giant posted on Thursday a first-quarter revenue of $5.96 billion, falling short of the $6.12 billion expected, and tumbling 3% from its quarterly revenue the year before. It reported a 1% year-over-year decrease in global comparable sales—or sales in stores that have been open for more than a year—dragged down by a 3.6% same-store sales decrease in the U.S.

The slump marked the company’s worst same-store sales decrease since a 8.7% nosedive in the second quarter of 2020, when the pandemic ravaged retailers.

“We entered 2025 knowing that would be a challenging time for the [quick-service restaurant] industry due to macroeconomic uncertainty and pressures weighing on the consumer,” CEO Chris Kempczinski told investors on Thursday. “During the first quarter, geopolitical tensions added to the economic uncertainty and dampened consumer sentiment more than we expected.”

“We’re not immune to the volatility in the industry or the pressures that our consumers are facing,” Kempczinski added.

A cautious consumer

With fast-food consumption seen as a bellwether for economic health, McDonald’s quarterly earnings align with growing fears over the state of the economy. With consumer confidence reaching a 13-year low amid concerns over tariffs and inflation, Americans are already taking steps to cut back on spending. About a quarter of U.S. shoppers have financed essentials like groceries with buy now, pay later services in the past year—up from 14% the year before—according to an April Lending Tree survey.

McDonald’s has noticed this shift in consumer spending particularly among lower-income diners, with store traffic dropping nearly 10% this quarter among the demographic.

“Traffic growth from the high-income cohort remains solid, illustrating the divided U.S. economy, where low- and middle-income consumers in particular are being weighed down by the cumulative impact of inflation and heightened anxiety about the economic outlook,” Kempczinski said.

But McDonald’s is making moves to appeal to lower-income consumers who are pulling back spending. It introduced its $5 meal deal in June 2024 to appeal to penny-pinched diners after the costs of some menu items ballooned in some franchised locations; a Big Mac cost nearly $18 at one store. The chain will continue to offer the meal deal, as well as other promotions, to increase traffic among lower-income consumers.

“If we get value and affordability right, we can win in the context of what’s going on in the marketplace,” Kempczinski said.

McDonald’s CEO warns the fast-food giant is ‘not immune’ to economic volatility after worst sales slump since 2020