The $5 Sausage McMuffin meal didn’t do the trick. Neither was the mix-and-match deal that allowed customers to choose, say, Filet-O-Fish and Chicken McNuggets for $6.
McDonald’s CEO Chris Kempczinski has tried to convince customers squeezed by inflation or tempted by competitors’ burgers and chicken sandwiches to return to the Golden Arches. But so far, the barrage of new meal deals and aggressive marketing to promote them have failed.
This year, every quarter, McDonald’s US. growth declined and customer visits reportedly fell. Wall Street has noticed: McDonald’s shares are now down 32% from their February all-time high.
Worse, some of his efforts to address these downward trends have backfired. Kempczinski acknowledged in August that too many new menus and offering launches had overwhelmed his restaurants and hurt service. The attack angered franchisees, a crucial group, just as McDonald’s was asking them to spend $1 million per store on renovations and improvements.
The CEO defended his plan this summer, arguing that the strategy was good and only the execution was bad. But McDonald’s dismal results of late suggest that its malaise is not limited to a few tactical errors. In its most recent quarter, McDonald’s reported U.S. comparable sales growth of 0.8%, not exactly a disaster but a continuation of its slowing growth and a disappointing performance, especially compared to the 8.5% jump of its resurgent rival Burger King.
“We need to be the first choice for more customers, more often,” Kempczinski told analysts at McDonald’s investor day at its Chicago headquarters in September. There, he developed the restaurant chain’s global business strategy, called “McDonald’s > Next”, which aims to serve better food, improve service and make restaurants easier to manage. But investors seem skeptical; for now they see more dimness than gleam in the Golden Arches.
Rising beef costs, fewer customers
What worries investors most about McDonald’s financial performance, particularly in the United States where the company generates 40% of its revenue, or $10 billion a year, is the decline in store visits. Although McDonald’s does not release traffic figures, analytics firm Placer.ai estimates that U.S. visits fell 4.5% in the first half of 2026. (A company spokesperson said McDonald’s was “unable to corroborate or validate third-party data.”)
McDonald’s risks losing more customers if it has to raise prices to keep up with beef inflation. The U.S. Department of Agriculture reports that beef prices in August were 5.9% higher than a year earlier. Kempczinski said last month that beef costs had nearly doubled over the past five years in the company’s largest markets, an acute problem for McDonald’s given its low-income customer base. He said price hikes were on the table, but the company lost customers after raising prices during the COVID crisis, a lesson etched in his mind.
Many fast food chains, including Wendy’s, Popeyes and Papa John’s, are also struggling in this environment. But there are winners in the industry, and those that thrive do so by remodeling their restaurants to make them more efficient and updating their menus.
A good example is Burger King, owned by Canadian conglomerate Restaurant Brands International. As part of its “Reclaim the Flame” turnaround plan (a much catchier name than “McDonald’s > Next”), Burger King has overhauled half of its restaurant fleet in four years with more to come. Its Whopper sales jumped 20% this year after the chain revamped its flagship burger for the first time in a decade. by improving its bun, mayonnaise and packaging.
Burger King’s marketing was also particularly clever: when Kempczinski awkwardly bit into the Big Arch Burger, which he called a “product,” in a promotional spot, Burger King responded with President Tom Curtis eating the Whopper in a natural and relaxed manner.
Franchisees hold the key
Certainly, McDonald’s remains the dominant fast food operator, with 11% of the American fast food market, according to a ranking by QSR magazine. Its U.S. sales are five times those of Burger King, the second-largest hamburger chain in the United States. Still, McDonald’s is feeling the pressure. “To be successful… growth must come from capturing greater (market) share,” Kempczinski told investors.
Renovating the restaurants is part of his plan to attract customers to McDonald’s, but to do that he needs buy-in from franchisees, who own 95% of all restaurants.
Under the agreement between McDonald’s and franchisees, store operators pay the fast-food giant rent, fees and royalties, and the parent company has a say in the locations and standards of restaurants. Franchisees can opt out of McDonald’s guidelines and, indeed, only 60-65% of restaurants implemented its “menu under $3” this summer, fearing lower margins. McDonald’s recently pushed back its goal of renovating 50,000 restaurants in total to 2028, from the 2027 deadline it had set in 2023. The CEO said McDonald’s was having “constructive” discussions with franchisees to get them on board.
At investor day, Kempczinski announced an $8.5 billion, 10-year plan to help franchisees with capital support and rent relief as they face higher costs for food, labor and equipment. About $5 billion of that will be deployed by 2030. Stocks fell following the spending announcement, but BTIG’s Peter Saleh said in a note that it was critical for McDonald’s to align franchisees behind the next-generation upgrades, according to Benzinga. UBS analysts praised McDonald’s plan as “achievable with strong execution” and said it was “critical to the health of franchisees and their ability to reinvest over the long term.”
When it comes to its menu, McDonald’s doesn’t sleep at the wheel; in fact, he did a lot of experimentation.
Top of his list of priorities at the investor day was capturing market share in the booming chicken and beverage markets. The company has tested hand-breaded chicken and, for users of GLP-1 weight loss drugs, protein-rich grilled chicken bowls in the United States. It also launched a new line of craft sodas and energy drinks with Red Bull. McDonald’s aims to increase its market share in the global beverage and chicken markets by 1.5 percentage points each by 2030.
Like every other large company, McDonald’s is looking for ways in which AI can improve its operations and services. It involves giving restaurant workers access to chatbots and testing AI voice orders while driving. Such plans could give the Golden Arches an advantage; Deutsche Bank’s Lauren Silberman wrote that implementing AI could improve the efficiency and profitability of McDonald’s restaurants in ways that would be harder for smaller players to replicate.
Kempczinski, who joined McDonald’s in 2015 as a senior executive in charge of strategy and innovation, is generally well-regarded on Wall Street and has weathered the periodic downturns that accompany the industry. Its previous multi-year strategy, called “Accelerating the Arches,” was a success, increasing the number of orders placed digitally, boosting McDonald’s loyalty program membership and culminating in several years of sales growth. However, the CEO may now have a smaller margin for error. “We are committed to ensuring that our restaurants do not fall behind as they have before,” he told investors.
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