McDonald's (MCD) Q1 2025 earnings
McDonald’s Q1 2025 Earnings Report: US Sales Drop Amid Consumer Spending Challenges
Key Performance Highlights
McDonald’s Corporation (NYSE: MCD) released its first-quarter 2025 earnings report on Thursday, revealing mixed results with notable challenges in its U.S. market. The fast-food giant experienced its largest domestic same-store sales decline since the Covid-19 pandemic, highlighting shifting consumer spending patterns and broader economic pressures.
Key Financial Metrics
| Metric | Actual | Expected |
|---|---|---|
| Earnings Per Share (Adjusted) | $2.67 | $2.66 |
| Revenue | $5.96 billion | $6.09 billion |
| Net Income | $1.87 billion | Previous Year: $1.93 billion |
Market Performance Analysis
U.S. same-store sales declined by 3.6%, significantly exceeding analyst expectations of a 1.7% decrease. This marked the second consecutive quarterly decline in domestic sales, primarily attributed to challenging weather conditions and increasingly cautious consumer behavior. The company’s stock responded with a 1.5% decrease in morning trading.
Consumer Spending Trends
CEO Chris Kempczinski highlighted a significant shift in consumer behavior, noting that quick-service restaurant traffic from low-income consumers dropped nearly double digits compared to the previous year. More concerning was the observation that middle-income consumer traffic experienced a similar decline, indicating a broader economic pressure on customer traffic.
Global Performance Overview
- Global same-store sales: -1% (impacted by leap year comparison)
- International operated markets: -1% (including Australia and France)
- International developmental licensed markets: +3.5% (exceeding analyst estimates of 3.2%)
Strategic Initiatives and Future Outlook
McDonald’s has outlined several strategic initiatives to address current challenges and drive future growth:
- Continued commitment to value meals, including maintaining the $5 meal deal throughout 2025
- Introduction of new menu items, with McCrispy Chicken Strips showing strong early performance
- Successful promotional campaigns, including the Minecraft tie-in meals
- Planned expansion of 2,200 new locations globally
- Capital expenditure projection of $3-3.2 billion
The company maintains its full-year outlook, projecting that net restaurant openings will contribute to slightly more than 2% systemwide sales growth, demonstrating confidence in its long-term strategy despite current market challenges.
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