McDonald's CEO Warns Sticky Inflation Persists Despite 0.8% Sales
Chris Kempczinski states flat traffic and high costs are the new normal. Beef prices nearly doubled in key markets over five years.
Key points
- McDonald's CEO Chris Kempczinski predicts high inflation and flat traffic will continue to weigh on the restaurant industry.
- Beef costs nearly doubled in key markets over five years, while U.S. same-store sales grew by only 0.8%.
- The National Restaurant Association reported a net decline in customer traffic for all but one month from August 2025 to July 2026.
McDonald's CEO Chris Kempczinski said Wednesday that high inflation and flat traffic will persist. He told CNBC that the industry must accept these conditions as the new normal rather than temporary difficulties.
The company reported U.S. same-store sales growth of just 0.8% in the latest quarter. This figure reflects falling domestic traffic as diners resist rising menu prices.
Consumer spending trends remain weak
Customers eat out less frequently due to higher gas and grocery costs. The National Restaurant Association reported a net decline in traffic for all but one month from August 2025 to July 2026.
Operators responded by increasing discounts to attract customers. However, these measures did not fully offset the broader trend of reduced dining frequency.
Input costs pressure profit margins
Beef prices nearly doubled in the company's largest markets over the last five years. Labor and construction expenses also rose, squeezing margins for McDonald's and its franchisees.
Kempczinski described inflation as sticky across the United States and globally. He noted that these cost pressures are not limited to a single region or time period.
Strategy shifts toward market share
The chain aims to steal diners from competitors in this tight environment. Kempczinski admitted the company raised prices too quickly after the pandemic, a mistake they now correct.
Executives detailed plans to gain share during an investor day on Wednesday. They emphasized earning growth from rivals while managing future price increases carefully.
