McDonald's CEO Declares Stubborn Inflation and Weak Traffic the New Normal

McDonald's U.S. same-store sales grew just 0.8% in its most recent quarter as traffic to its domestic restaurants fell — and CEO Chris Kempczinski does not expect that picture to improve.

"One of the things I've talked to our team about is we need to stop talking about that being a difficult environment, and just say that is the environment," Kempczinski said Wednesday on CNBC's "Squawk on the Street." "Because I think, as we look out forward, we're not expecting things to change."

For years, Kempczinski has warned investors and analysts about the "challenging environment" facing McDonald's and the broader restaurant industry. The numbers now back him up. Diners are eating out less frequently and pushing back against higher menu prices as they absorb increased costs on everything from gas to groceries. From August 2025 to July 2026, industry operators surveyed by the National Restaurant Association reported a net decline in customer traffic in every month but one.

McDonald's and its rivals have leaned into discounts to lure customers back. But the pressure is not confined to the demand side of the equation.

Restaurant operators — McDonald's and its franchisees included — have watched beef prices soar. Kempczinski said beef costs have nearly doubled over the last five years in the company's biggest markets. Labor and construction expenses have also ticked higher, squeezing margins from multiple directions at once.

"Across the board, we're seeing that inflation is sticky," Kempczinski said. "It's sticky, not just in the U.S., but around the world."

Chasing Competitors' Customers

Faced with tougher operating conditions, McDonald's is betting on taking diners away from rivals rather than waiting for the market to recover.

"The biggest thing that you need to do in an environment like this is you have to be able to earn share," Kempczinski said. "You have to be able to actually grab growth from your competitors."

That strategy carries a pricing constraint. Kempczinski said McDonald's will likely have to consider price increases, given persistent cost pressure, but the chain will need to move carefully to avoid driving diners away. He reiterated that the company believes it made a mistake by raising prices too quickly in the years after the Covid pandemic.

The admission matters for franchisees and investors alike. After the post-pandemic pricing backlash, McDonald's rebuilt its value reputation through discount campaigns and bundle deals. Any fresh price increases would test whether that goodwill holds while beef costs sit near record levels.

Kempczinski and other McDonald's executives planned to share more details about the company's market-share strategy during its investor day on Wednesday. The session is expected to show how the chain intends to convert a stagnant industry backdrop into relative growth — effectively betting that its scale, supply chain and discounting power can win a larger slice of a market that is no longer growing on its own.