McDonald’s CEO: Customers trade down, pressuring sales

In recent remarks to investors and company leaders, McDonald's CEO Chris Kempczinski warned that customers are trading down to cheaper menu items, putting pressure on sales and average transaction sizes.

Diners are choosing lower-priced sandwiches and value items instead of higher-priced combos and limited-time premium items. That reduces the average check per customer and shifts the sales mix away from higher-margin products.

The pattern follows a period of higher grocery and dining costs that led McDonald's and other chains to raise menu prices. While those increases helped offset cost inflation, trading down has limited the revenue benefit from higher prices. Franchisees and corporate operators report that promotions and value bundles have become an important driver of traffic as some customers focus on lower-priced options.

McDonald's response includes expanding targeted value offers, boosting digital deals through its app, and adjusting promotional calendars. Executives also cite operational efficiency and menu simplification as measures to protect margins while offering cheaper items. The largely franchised model gives many pricing and promotion decisions to local operators, who are tailoring offers to regional demand.

Investors will monitor whether the trading-down behavior is temporary or a longer-term change for customers. Kempczinski warned, “We're seeing customers trade down to cheaper items, which is pressuring sales,” and added company officials are monitoring sales patterns and will continue to optimize pricing, promotions and menu assortments.