By Savyata Mishra
May 7 (Reuters) – McDonald’s executives on Thursday flagged a softer start to the second-quarter citing persistent pressure on lower-income consumers from higher fuel prices, as the burger chain also missed first-quarter U.S. sales growth estimates.
Executives said higher fuel costs were having an outsized impact on lower‑income diners.
“Elevated gas prices are the core issue we’re seeing right now,” CEO Chris Kempczinski said on an earnings call, adding that inflation at the pump “is going to disproportionately impact low‑income consumers, and we expect the pressures there are going to continue.”
Shares of the company pared premarket gains to rise 0.6% in early trading.
Comparable sales in both the U.S. and international markets were slightly negative in April and CFO Ian Borden said the company expects a “meaningful deceleration” in second‑quarter growth from first‑quarter levels.
“I think probably it’s fair to say …(macro environment) certainly not improving and it may be getting a little bit worse,” Kempczinski noted.
The company is leaning into a refreshed value strategy to support demand through the remainder of the year.
In mid‑April, McDonald’s expanded its McValue platform in the U.S., adding everyday menu items priced under $3 alongside a $4 breakfast meal deal. Executives said early indicators since the launch were in line with expectations.
For the first quarter, U.S. same‑store sales growth of 3.9% missed expectations of a 4.2% increase.
Several U.S. restaurant chains such as Shake Shack, Papa John’s, Wingstop and Domino’s have reported weaker quarterly sales growth, citing a fallout from the Iran war.
Lower-income consumers are becoming more selective, Wall Street analysts have said, increasingly trading down to simpler, single‑item orders rather than full meals.
To capture cost-conscious customers, McDonald’s has expanded its McValue platform with new $3 and $4 tiers in April.
Globally, McDonald’s comparable sales rose 3.8%, narrowly missing analysts’ average expectation of 3.95%, though it was an improvement from a 1% decline a year ago.
The company’s total revenue of $6.52 billion exceeded estimates of $6.47 billion, according to data compiled by LSEG. On an adjusted basis, it earned $2.83 per share, beating expectations of $2.74.
(Reporting by Savyata Mishra in Bengaluru)
