McDonald’s reported an unexpected drop in global sales for the first quarter on Thursday, as economic uncertainty and chaotic tariffs dampened spending among budget-conscious customers in key markets.

CEO Chris Kempczinski described the environment as “the toughest of market conditions,” with global comparable sales falling 1%, contrary to analysts’ expectations of a 0.95% increase.

The turbulence caused by Donald Trump’s trade policies has intensified financial strain on lower-income consumers in the US and Europe, while policy instability has disrupted businesses across sectors by increasing costs and threatening supply chains.

Meanwhile, the US economy showed signs of weakness, contracting in the first quarter for the first time in three years and heightening fears of a potential recession in 2025.

Trump trade policies force sales slump amid global uncertainty

McDonald’s latest results reflect broader industry concerns, echoing recent alerts from Domino’s Pizza, Chipotle, and Starbucks that American consumers are cutting back on dining out.

McDonald’s expanded its value menu to boost demand, but US sales still fell 3.6% in Q1, worse than expected, while international licensed markets grew 3.5%, helped by recovering sales in the Middle East and Japan.

Both Trump trade policies and boycotting drop sales

McDonald's has been a significant target of the vigorous boycott campaign against franchises and businesses that extend support to the Israeli occupation, particularly following its genocidal war on the Gaza Strip. 

In April last year, McDonald's announced plans to acquire all of its restaurants franchised by the Alonyal group in "Israel".

The deal encompasses the sale of all 225 restaurant locations and the retention of the entire staff, which entails at least 5,000 personnel. McDonald's' share value was reported to have declined by almost 2% after the deal was brokered.

The corporation also noted that it remains "committed to the Israeli market."

Bloomberg revealed in February that McDonald's Corporation faced a setback in its fourth-quarter performance as sales failed to meet investor expectations, primarily due to the impact of the boycott on Israeli-linked businesses.

In an earnings preview, Morgan Stanley stated that the group's "reputation for value has appeared diminished" among customers and that it required offerings such as $5 dinners "to cater to a key customer cohort that has pulled back."