TLDR
- Global comparable sales down 1% in Q1 2025.
- U.S. comp sales dropped 3.6% amid consumer strain.
- EPS rose 1% to $2.67, topping expectations.
- New $5 meal deal and menu items show promise.
- Shares up 17% over the past year.
McDonald’s Corporation (NYSE: MCD) reported a mixed set of first-quarter 2025 results, as broad consumer pressures in the U.S. weighed on sales. Shares traded at $312.46 midday Friday, down slightly, though the stock remains up 17% over the past year.
Global comparable sales declined 1% in Q1, with the U.S. market seeing a sharper 3.6% drop as inflation and economic pressures hit low- and middle-income diners. Despite weaker sales, adjusted earnings per share (EPS) came in at $2.67, up 1% in constant currencies and better than some forecasts. The company reported restaurant margins topping $3.3 billion and an adjusted operating margin near 45.5%.
🚨 McDonald's Corporation ($MCD) earnings results 💥
EPS: $2.67 vs. $2.66 est. (+0.38%) ✅
Revenue: $5.96B vs. $6.10B est. (-2.34%) ❌#Earnings #StockMarket pic.twitter.com/o0MzhVN9U7— FundamentalScope (@ScpFundamental) May 1, 2025
U.S. Weakness Offset by New Initiatives
McDonald’s blamed the U.S. sales drop on broad-based consumer challenges, as traffic from its core low- and middle-income segments slowed. However, management pointed to several bright spots that could lift results in coming quarters.
The launch of its McValue platform, including a popular $5 meal deal, has resonated with cost-conscious customers. CEO Chris Kempczinski noted strong initial demand, though some promotions like the buy-one-add-one-for-a-dollar offer haven’t driven as much incremental traffic as hoped.
McDonald’s also rolled out new menu items, including McCrispy Chicken Strips, which are expected to fuel growth. Beverage sales remain a key focus area, with plans to expand offerings and capture more market share in this profitable category.
International Markets Show Strength
Outside the U.S., McDonald’s delivered more encouraging results. Its International Developmental Licensed Markets posted a 3.5% rise in comparable sales, led by strong performances in the Middle East and Japan. Still, the UK remains a weak spot where the chain is yet to regain share, and European markets face inflation pressures, particularly from rising beef prices.
A successful marketing tie-in with the Minecraft movie also boosted customer engagement, with related collectibles selling out quickly. Management highlighted all-time high U.S. customer satisfaction scores, signaling that operational execution remains strong even as sales face headwinds.
Stock Outperforms Broad Market
Despite the Q1 sales dip, McDonald’s stock has outperformed the broader S&P 500. Shares have gained 17% over the past 12 months versus an 11.98% rise for the index. Year to date, MCD is up 8.31%, while the S&P 500 has declined 3.58%.
Looking ahead, McDonald’s next earnings are due between July 28 and August 1, 2025. Investors will watch closely to see if its value-focused deals and new menu items can reverse the recent sales softness, particularly in its critical U.S. market.
