McDonald’s Bets on Value as the Rich Spend, the Poor Tighten Belts

McDonald’s CEO Chris Kempczinski has openly acknowledged the growing divide in the U.S. economy, describing it as a “two-tier economy” where upper-income consumers continue to spend freely, while middle- and lower-income consumers face increasing financial pressure. This observation came as the fast-food giant announced the return of its Extra Value Meals, offering significant savings on combo meals as part of an effort to attract budget-conscious diners. The strategy reflects a broader trend in the fast-food industry, where pricing pressures and shifting consumer behavior are reshaping demand.

The new menu offerings include eight items across breakfast, lunch, and dinner, each priced 15% less than purchasing the entree, fries, and drink separately. Limited-time promotions include a $5 Sausage McMuffin with Egg meal and an $8 Big Mac meal, with plans for additional offerings later in the year. This initiative aligns with McDonald’s ongoing “value journey,” as the company seeks to balance affordability with profitability in a challenging economic landscape. Joe Erlinger, President of McDonald's USA, emphasized the company’s commitment to delivering “everyday affordable prices” across its menu.

The move also signals a strategic response to declining traffic among lower-income customers, particularly in the wake of rising menu prices. Same-store sales growth for McDonald’s has been driven primarily by price increases rather than volume, with visits from households earning less than $45,000 per year dropping by double-digit percentages industrywide in the second quarter of 2025. Kempczinski noted that these consumers are “feeling under a lot of pressure,” often skipping meals or opting to eat at home, which has direct implications for the fast-food industry’s bottom line.

Beyond menu pricing, Kempczinski also voiced support for raising the federal minimum wage, highlighting the need for a more level playing field across the restaurant industry. The current U.S. federal minimum wage of $7.25 per hour, which has not been updated since 2009, stands in stark contrast to state-level increases in places like Washington, D.C., and California, where minimum wages have reached as high as $17.50 per hour. Legislative efforts, including the Raise the Wage Act of 2025 and the Higher Wages for American Workers Act, aim to incrementally raise the federal minimum wage to $17 or $15 per hour by 2030 or 2026, respectively. Kempczinski’s remarks suggest that McDonald’s is open to supporting such initiatives, especially given the increasing political momentum behind wage reform.

The broader economic implications of these trends underscore a growing divide between affluent and struggling consumers. Unlike the Great Recession, where all consumer segments were affected by economic downturns, the current “K-shaped” economy sees upper-income earners continuing to spend on premium products and services, while lower-income consumers are forced to make more difficult trade-offs. McDonald’s, with its vast scale and purchasing power, is uniquely positioned to navigate this duality. While franchisees remain cautious about the impact of price cuts on margins, the company’s emphasis on value is seen as a necessary strategy to retain a critical segment of its customer base.

As the debate over minimum wage reform and consumer spending habits continues, McDonald’s actions may serve as an indicator of broader retail and economic trends. Whether the “two-tier economy” described by Kempczinski becomes the new normal or a temporary phase will depend on a range of factors, including wage policy changes, inflation, and consumer confidence. For now, McDonald’s is doubling down on affordability, betting that its value-focused approach will resonate with a large portion of the American population.

Source:

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[3] Will Raising Federal Minimum Wage to $15 Ever Happen? (https://www.nasdaq.com/articles/will-raising-federal-minimum-wage-15-ever-happen)

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[6] McDonald's CEO is grappling with a 'two-tier economy' as ... (https://fortune.com/2025/09/03/mcdonalds-two-tier-economy-lower-income-minimum-wage/)