McDonald’s Beats Q1 Estimates but CEO Warns Spending May Be Worsening

CNBC reported Thursday that McDonald’s delivered first-quarter results ahead of analyst expectations. But McDonald’s consumer spending warnings from CEO Chris Kempczinski quickly tempered investor enthusiasm.

McDonald’s Clears the Bar on Revenue and Profit

The fast-food chain posted adjusted earnings of $2.83 per share against a $2.74 consensus estimate. Net revenue climbed 9% year-over-year to $6.52 billion, edging past the $6.47 billion Wall Street had penciled in.

Net income reached $1.98 billion for the quarter. That compares to $1.87 billion in the same period a year ago. Global same-store sales rose 3.8%, roughly matching the 3.7% consensus tracked by StreetAccount.

Shares initially jumped more than 3% in premarket trading before paring gains. The stock was only marginally higher by mid-morning as Kempczinski’s comments on the earnings call landed.

A Challenging Environment Dominated the Call

Kempczinski described the operating backdrop as difficult and said conditions are not improving. He suggested the situation may in fact be deteriorating slightly.

He pointed specifically to elevated fuel prices stemming from the U.S.-Iran conflict as a particular burden on lower-income households. Kempczinski said those pressures are expected to persist through coming months.

Other major restaurant chains have echoed the concern. Domino’s Pizza and Chipotle Mexican Grill both reported that customer traffic softened noticeably in March after the conflict began weighing on sentiment.

Background: MCD Has Leaned Hard Into Value

McDonald’s stock has fallen roughly 10% over the past year as macro headwinds have pressured the broader restaurant sector.

In response, the company has sharpened its value positioning to attract budget-conscious diners. At the same time, it has pursued higher price points through marketing collaborations and limited-time items. Tie-in meals with “The Super Mario Galaxy Movie” and a K-pop themed promotion carried no discounts. A supersized Big Arch burger launched in early March as a premium option.

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U.S. same-store sales rose 3.9%, driven by higher average spending per visit rather than increased customer counts. Internationally, the company’s operated markets segment also grew same-store sales 3.9%, with France, Germany, and Australia among the contributors.

Q2 Outlook Flagged as a Tough Comparison

CFO Ian Borden warned that the second quarter will face a difficult comparison against last year’s blockbuster Minecraft movie tie-in promotion. Borden said the company had already factored in a slowdown before consumer confidence weakened further.

McDonald’s is also reviewing the future of its small portfolio of company-owned U.S. restaurants, which have seen margin pressure. A sale to franchisees is under consideration.

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