McDonald’s CEO Says Tariff Jitters Are Hurting Drive-Thru Sales

McDonald’s Chief Executive Chris Kempczinski has warned that rising tariff concerns are dampening customer traffic, particularly during breakfast hours. He said anxiety among lower-income consumers is prompting them to skip quick-service meals, leading to softer sales and pressure on profit margins.

Breakfast Rush Loses Momentum

The morning daypart has been hit hardest, with chains such as McDonald’s and Wendy’s seeing fewer drive-thru visits. Kempczinski noted that households facing cost pressures are cutting back on discretionary spending, and breakfast on the go is often the first to go. Rising tariffs have only added to the strain, creating uncertainty that filters directly into consumer behavior.

Margin Targets Revised Down

The company now expects its full-year operating margin to match last year’s 14.8%, abandoning earlier forecasts for expansion. Kempczinski cited higher costs, partly linked to shifting trade policies, as a key factor in the downgrade. Investors had been looking for margin gains in 2025, but the revised guidance underscores the weight of macroeconomic headwinds.

Value Deals to Win Back Traffic

McDonald’s is responding with a sharpened focus on value. Promotions such as $1 add-on offers and themed bundles—like a recent Minecraft-branded meal—are aimed at driving visits. Similar strategies are being deployed in international markets, where affordable menu options have supported sales despite broader consumer caution.

Broader Economic Signal

Economists note that falling breakfast traffic can be an early warning of wider weakness in consumer spending. With tariffs and job market concerns weighing on sentiment, households appear increasingly selective about where and when they spend, a trend that could spill over into other discretionary categories.

Tips for Traders

• Track McDonald’s earnings guidance for signs of ongoing pressure on margins.

• Watch fast-food sector traffic trends as a gauge of consumer sentiment.

• Follow value menu performance for clues on price sensitivity in discretionary spending.

• Monitor tariff developments and their potential ripple effects across consumer-facing sectors.

• Keep an eye on employment and CPI data to assess the broader spending environment.