McDonald's CEO Says Sticky Inflation And Flat Traffic Are Squeezing Restaurants

The Backdrop

McDonald's chief Chris Kempczinski says the tougher backdrop is not a blip, it is just how things are now. On CNBC's Squawk on the Street, he told his team to stop framing it as a temporary "difficult environment" and accept that it is the environment they are operating in. Looking ahead, he said the company does not expect conditions to shift.

He also flagged that inflation is hanging around. "Across the board, we're seeing that inflation is sticky," he said, noting it is not only a U.S. issue but a global one.

What The Data Shows

In the latest quarter, U.S. same-store sales were up 0.8% even as traffic to domestic locations declined. Customers have been cutting back on dining out, pushing against menu increases while paying more for daily essentials like gas and groceries.

That matches broader readings. The National Restaurant Association's operator survey recorded a net decrease in customer traffic in every month from August 2025 through July 2026 except one. To lure diners, McDonald's and its competitors have leaned more on discounts.

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Costs Keep Climbing

It is not just customers feeling the squeeze. Operators, including McDonald's and its franchisees, are dealing with higher input costs that compress margins. Kempczinski said beef in the company's largest markets is close to twice the cost it was five years ago. He added that other expenses, such as labor and construction, have also moved higher.

Strategy And Pricing

Given the tougher setup, Kempczinski said the focus is on taking share from rivals. "The biggest thing that you need to do in an environment like this is you have to be able to earn share," he said. "You have to be able to actually grab growth from your competitors." He said the company expects to weigh additional price moves but stressed they have to avoid pushing customers away, noting that pricing escalated too rapidly during the post-Covid period. More detail on how McDonald's plans to capture market share is slated for the company's investor day on Wednesday.

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