McDonald's has a big customer problem on hands

McDonald's is one of the most popular restaurants in the world, but the company has been witnessing a troubling shift in customer behavior lately as the economy strains many of its customers, forcing them to reduce their visits.

Customers can't be blamed, given that prices across the quick-service restaurant (QSR) industry have risen sharply, making fast food considerably pricier than in the past. When I went recently, a six-piece McNuggets, a small Sprite, and small fries cost me about $8. Crazy expensive, no? Still, it's not uncommon to go to McDonald's and see value menu deals over $10, making the cost of lunch or dinner for a small family feel more like casual dining than fast food.

Unfortunately, it doesn't appear to be getting any better. The latest inflation data from the Bureau of Labor Statistics' Consumer Price Index shows that food-away-from-home prices increased 3.7% in September year over year.

Food away from home inflation by year

• 2024: 4.1%
• 2023: 5.8%
• 2022: 7.7%
• 2021: 3.9%
• 2020: 3.4%
• Source: USDA Economic Research Service (ERS) using BLS CPI data.

With prices rising, it's little wonder that more people are skipping the Drive-thru—a trend that, according to Placer.ai, has worsened, adding more pressure on McDonald's.

McDonald's sees slump in customer visits

McDonald's (MCD) foot traffic declined by 3.5% overall in the third quarter, according to a recent report from Placer.ai. But digging into the data, the numbers are even more concerning. New store openings partially offset the number. Remove those locations from the equation, and traffic to stores open at least a year slipped 4%.

McDonald's Q3 visits (year over year):

• Same-store visits: -4%
• Overall visits: -3.5%
• QSR benchmark: -2.3%
  Source: Placer.ai

"The quick-service category is under pressure from multiple fronts: persistent inflation, shifting consumer behavior, value-menu fatigue, and even the growing adoption of GLP-1 weight-loss drugs, which are dampening demand for food consumed away from home," wrote Placer.ai.

Consumers are increasingly cautious about spending, especially households with lower total incomes—McDonald's core customer. Rising layoffs and inflation outstripping wage gains are a big and persistent headwind.

"We've got lower-income consumers that remain under pressure; their visits to QSR [industrywide] were down double-digit again in Q2," noted McDonald's CFO Ian Borden on the company's second quarter earnings call.

McDonald's fact at-a-glance:

• Year founded: 1940
• Number of locations worldwide: 43,477 in 2024.
• Annual revenue: $25.9 billion in 2024.
• Employees: >2 million worldwide, including franchises.
  Source: SEC 10-K filing.

McDonald's CEO Chris Kempczinski said that strain on lower-income customers was due to declining inflation-adjusted income and worsening sentiment, likely because of unease over tariffs and rising unemployment.

In August, the U.S. unemployment rate was 4.3%, the highest since 2021, and up from 3.4% in 2023.

Placer.ai says McDonald's foot traffic this summer trailed 2024, and the trend has worsened recently, leading to a 4.4% drop in September visits.

Monthly store visits compared to 2024:

• September 2025: -4.4%
• August 2025: -4.4%
• July 2025: -1.8%

McDonald's foot traffic was last positive in April, before most tariffs were enacted. Since then, CPI inflation has risen to 3% from 2.3%.

McDonald's responds with cheaper menu options

McDonald's isn't the only QSR chain facing declining foot traffic. It's an industry-wide problem. For instance, Wendy's traffic was worse, falling 6.5% in the third quarter.

Burger chains QSR foot traffic in Q3:

• Burger King: -3.5%
• Wendy's: -6.5%
• Jack in the Box: -7.7%
  Source: Placer.ai

To address the problem and get people back to its locations, McDonald's is pulling many levers, including:

• Driving more customers toward its loyalty program to boost visits.
• Returning Snack Wraps to its menu at a low national $2.99 price point in July.
• Launching its Extra Value Meal in September.
• Bringing back its popular Monopoly game to loyalty members on Oct. 6.

In its second-quarter earnings conference call, McDonald's confirmed plans to double down on deals and encourage more franchisees to embrace national pricing, a challenge given that franchisees face very different labor costs and other expenses from market to market.

"The wage rates that exist across the U.S. are quite varied. And so we need to respect that and work with the franchisees on how do we solve for that in a way that works for everybody's P&L. It's not easy, but I think we've shown the ability with whether it's the $5 Meal Deal, the $2.99 that we can come together and do it. But all of these things take a lot of conversations and collaboration," said Kempczinski.

"Reengaging the low-income consumer is critical as they typically visit our restaurants more frequently than middle- and high-income consumers," said Kempczinski.

That's particularly true for McDonald's loyalty program members. Its program has over 185 million 90-day active users in 60 global markets, and in the U.S., visits increase substantially after a person signs up. On average, McDonald's visits jump to 26 in the year after joining, up from 10.5 times beforehand.

Related: Olive Garden makes big menu move as restaurant prices surge