McDonald's has a warning for customers about rising costs

For decades, McDonald's was synonymous with affordable, tasty fast-food meals. While its food offerings still taste good, the chain's brand image changed after the Covid pandemic.

The fast-food giant has undergone a major transformation in how it sets prices and targets customers. From 2020 to 2026, McDonald's reputation shifted from the "cheapest option" to a brand struggling with "value perception."

Over the last few years, McDonald's average prices per item have grown about 40%, The Washington Post reported. The chain faced harsh criticism, even though CEO Chris Kempczinski justified the increases, citing the rising cost of food, writes TheStreet's Veronika Bondarenko.

In September 2025, Kempczinski raised the alarm about new customer behavior. He stressed that many customers, especially those with lower incomes, are starting to skip meals or just eat at home. The CEO called this a "two-tier economy" and recognized that the company needs to make eating at McDonald's feel affordable again.

To win back customers, earlier this year, McDonald's launched several new value offerings, including the $3 menu and the $4 breakfast. Early signs showed these deals are working.

Still, during the company's latest earnings call, the chain dropped some bad news for its customers.

McDonald's reports solid first-quarter results in "challenging environment"

On May 7, 2026, McDonald's reported first-quarter earnings results, revealing 3.8% growth in global comparable sales and 3.9% in US comparable sales, according to the company's Form 10-Q with the Securities and Exchange Commission (SEC).

Moreover, the chain revealed that systemwide sales increased 11% to over $34 billion, and adjusted earnings per share amounted to $2.83. CEO Chris Kempczinski said the results show that McDonald's "can drive results even in a challenging environment."

The company reaffirmed its full-year targets and reiterated its goal of reaching roughly 50,000 restaurants by the end of 2027, according to its earnings call as reported by Seeking Alpha.

"We believe McDonald's can still do what very few brands can. We can lead on value, we can show up in culture in ways that matter, and we can keep bringing customers menu news that gives them more reasons to choose us," Kempczinski said.

While the results came in slightly stronger than Wall Street estimated, Executive VP & Global CFO Ian Borden pointed out that "U.S. company-operated margins in the quarter were not acceptable. We're actively addressing opportunities to improve performance and revisiting the optimal franchisee versus company ownership balance to maximize system value."

Additionally, Kempczinski highlighted that the business faces several pressures.

Photo by huettenhoelscher on Getty Images

McDonald's warns of higher costs as meat and energy prices grow

McDonald's acknowledged inflationary pressures for its franchisees and customers amid rising beef and energy prices. Kempczinski pointed out that higher costs are tightening cash flows for its franchisees, which account for 95% of the chain's restaurants, reported the Financial Times.

"No surprise, with the inflation that we're seeing in the market, there's certainly a lot of pressure that we're trying to navigate with franchisees around their own profitability," he said.

In March, energy costs spiked by 10.9%, largely fueled by a massive 21.2% jump in gasoline prices. This surge in fuel was the primary driver for nearly three-quarters of the overall monthly increase in consumer prices, according to the Consumer Price Index.

March changes in Consumer Price Index over the last 12 months:

• Fuel oil rose 44.2%.
• Gasoline (all types) increased 18.9%.
• Food at home went up 1.9%.
• Food away from home prices grew 3.8%.
• Electricity rose 4.6%.
  
  Source: Consumer Price Index

"Beef costs have hit records in the U.S., which is putting pressure on fast-food chains amid a difficult operating environment. At McDonald's, beef inflation has impacted the U.S. and other major markets," writes Restaurant Business' Jonathan Maze.

And while the ongoing war in the Middle East did impact the chain's operations in the region, there was no material impact on the company's results in the first quarter. However, Kempczinski highlighted that "the operating environment remains volatile."

The CEO reiterated that the chain's value program has recaptured some low-income customers. The ongoing war remains a threat, however, driving up global oil and natural gas prices and consequently increasing costs for energy use, including cooking and freight transportation, the Financial Times points out.

"But clearly, when you have elevated gas prices, which is the core issue that I think we're all seeing about it in the press right now, gas prices, inflation on that, that is going to disproportionately impact low-income consumers. And so we expect the pressures there are going to continue," Kempczinski said.

Related: Panera Bread makes major menu changes to win back customers

What price pressures mean for McDonald's and its customers

Clearly, McDonald's has no plans to cut down its value promotions. Yet mounting pressures from inflation and skyrocketing fuel prices are making this goal more challenging.

"Analysts highlighted that McDonald's ability to balance pricing with customer value is key to maintaining margins while keeping consumers engaged. This strong performance, especially in a time of heightened economic uncertainty, underscores McDonald's strategic pricing discipline and operational flexibility, which makes it a reliable player in the consumer sector," writes PanFinance.

While the first-quarter results came in better than expected, McDonald's is aware that the real consequences of the rising energy and fuel prices have yet to be felt in the second quarter. Additionally, the company deemed its profit margins in the quarter unacceptable (down 25% for the company-operated restaurants) and highlighted weakness among some of its franchisees.

"And so I think certainly, the performance in the U.S. right now relative to franchisees would indicate it's not being run as well as it could be. And so it's either on us to fix that or we're going to find franchisees who can run the restaurant better," the CEO said.

Related: Papa Johns sees three alarming shifts in customer behavior

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This story was originally published May 12, 2026 at 10:17 AM.