McDonald's CEO Says Weak Customer Traffic and Stubborn Inflation Are the New Normal for Restaurants
McDonald's CEO Chris Kempczinski stated that weak customer traffic and stubborn inflation are becoming the new normal in the restaurant industry.
In an interview with CNBC, he mentioned that the team needs to stop referring to the current situation as a difficult environment and should directly acknowledge it as the environment, looking forward without expecting changes. He indicated that industry traffic growth will be largely flat, and inflation will persist at high levels for years.
McDonald's same-store sales in the U.S. grew only 0.8% last quarter, with domestic traffic declining. Beef costs have nearly doubled in major markets over the past five years, and labor and construction costs have also risen.
Kempzinski pointed out that global inflation is sticky and not limited to the U.S. The company will focus on capturing market share from competitors rather than relying on an overall recovery in industry traffic, while cautiously managing menu price increases.
The company has previously warned of a challenging environment, as consumers are dining out less due to rising everyday costs and resisting higher menu prices.
The situation is driven by investor day and financial report data, with capital and operational resources shifting from expected recovery to share competition and cost management. The beneficiaries will be chains that can effectively capture market share, while restaurant operators face pressure from both declining traffic and rising costs.
Same-store growth mainly comes from higher average ticket prices and product mix, offset by negative traffic.
Source: Public Information
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As the CEO of McDonald's, Chris Kempczinski has a history of publicly warning about the challenging environment and sticky inflation, redefining weak customer traffic from a temporary difficulty to a sustained new normal, and pushing for a shift from reliance on industry growth to internal share competition.
In terms of capital strategy, the company is investing resources into value menus, operational execution, and competitive share acquisition, while addressing input costs like beef that have nearly doubled. The motivation is to maintain growth and profits under flat traffic and high inflation, rather than waiting for external demand to rebound.
Similar cases include other fast-food and restaurant chains shifting from price increases to value and share strategies during inflation cycles. The industry is currently transitioning from post-pandemic recovery expectations to a phase of structural sticky inflation and stagnant traffic.
Essentially, this represents a shift in pricing power: growth is moving from industry traffic expansion to competitive share and cost transmission control. The mechanism is that consumer budgets are squeezed by everyday inflation, reducing dining frequency, which shifts menu pricing power from simple cost pass-through to a need to balance perceived value in competitive positioning. Sticky inflation normalizes the "difficult environment."
ABAB News · Cognitive Law
- Traffic flat, inflation is the norm
- No expected changes, just grab market share
- Costs doubled, menu needs caution