McDonald's CEO Chris Kempczinski stated on Wednesday that the restaurant industry will continue to face challenges from flat traffic and high inflation. Speaking on CNBC's 'Squawk on the Street,' he noted, '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.' He indicated that there are no expectations for significant changes in the near future.
Kempczinski has consistently warned investors and analysts about the 'challenging environment' for McDonald's and the broader industry. The company reported a U.S. same-store sales growth of 0.8% in its most recent quarter, coinciding with a decline in traffic to its domestic restaurants.
Consumers are dining out less frequently, responding to higher menu prices amid rising costs for essentials such as gas and groceries. According to a survey by the National Restaurant Association, from August 2025 to July 2026, there was a net decline in customer traffic every month except one.
In response, McDonald's and its competitors have implemented discounts to attract customers. However, restaurant operators, including McDonald's and its franchisees, are also experiencing increased costs. Kempczinski reported that beef prices have nearly doubled in the company's largest markets over the past five years, with other expenses like labor and construction also rising, which is affecting profit margins.
'Across the board, we're seeing that inflation is sticky,' Kempczinski said, adding that this trend is observed not only in the U.S. but globally. To navigate these operating challenges, McDonald's is focusing on gaining market share from its competitors. 'The biggest thing that you need to do in an environment like this is you have to be able to earn share,' he stated.
While considering potential price increases, Kempczinski emphasized the need to avoid alienating customers, acknowledging that the company may have raised prices too quickly in the years following the Covid pandemic. More details on McDonald's strategies to gain market share will be shared during its investor day on Wednesday.