McDonald's admitted its prices had grown too high as every division's sales fell

McDonald's executives acknowledged in July 2024 that diners considered the company's prices too high as lower-income consumers balked after years of high inflation. The second-quarter earnings call came alongside worse-than-expected results: same-store sales declined across every division.

CEO Chris Kempczinski conceded the damage: 'We recognize that in several large markets, including the U.S., we have an opportunity to improve our value execution. Consumers still recognize us as the value leader versus our key competitors but it's clear that our value leadership gap has recently shrunk. We are working to fix that with pace.' Executives said they were taking a 'forensic approach' to evaluating prices. Crucially, lower-income diners weren't trading to rivals — they were eating out less across most of the company's markets globally, particularly families in Europe.

The repair attempt was the $5 value meal, launched 25 June: the launch day drew 8% more visits than the average Tuesday that year, deals sold topped expectations, and 93% of franchisees committed to extending it past its initial four-week window. But executives admitted it had not yet translated into sales increases. 'For 70 years we've led on value... we wrote the playbook on value,' Kempczinski said.

Years of menu price increases eroded the one promise the brand is built on — value leadership — and the gap versus competitors visibly narrowed.

The affected customers were the core: lower-income diners who responded not by switching brands but by dropping fast food altogether.

A brand built on 70 years of value credentials needed a flagship $5 offer and a public 'forensic' pricing review to admit what the P&L already showed.

A value brand that stops being the cheapest option loses by definition: pricing power built in inflation works until the customer who made you — the low-income diner — simply stops coming.

The $5 meal was extended into the summer with near-unanimous franchisee support; management promised value execution fixes, warning customers would 'continue to feel the pinch' for several quarters.