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Americans have lost their appetite for Big Macs and fries as McDonald\u2019s reported its first sales drop<\/a> in nearly four years, citing inflation-weary customers pulling back from fast food. But there\u2019s a missing part of McDonald\u2019s equation that hasn\u2019t widely been taken into account, argued Stephen Zagor, food and restaurant consultant and adjunct assistant professor of business at the Columbia Business School: the election.<\/p>\n \u201cBecause of the constant drumbeat of the political parties saying, \u2018You\u2019re feeling bad; we know you\u2019re feeling bad, so we want to solve your problem,\u2019 I wouldn\u2019t be surprised if a lot of that doesn\u2019t relieve itself until the elections,\u201d he told Fortune<\/em>.<\/p>\n Political spending has skyrocketed during the 2024 presidential election, projected to reach $16 billion<\/a> this year alone, with both political parties hammering messages about inflation<\/a> to curry favor from down-and-out Americans. A May Harris poll<\/a> found negative sentiment about the economy has increased as the election approaches, with 56% of respondents believing the U.S. is in a recession\u2014despite signs of easing inflation<\/a>. This widespread fear in the face of a strong economy indicates a vibecession<\/a> is here to stay.\u00a0<\/p>\n Those negative sentiments have come for McDonald\u2019s, Zagor said. The company reported a 1% drop<\/a> in same-store sales in the U.S. There was a similar trend for global same-store sales, though McDonald\u2019s attributed the problem to slower store traffic in France and the Middle East fell due to boycotts<\/a> sparked by the war in Gaza. The fast-food giant expects U.S. same-store sales to remain lower for the next few quarters. Not for the first time, McDonald\u2019s has acknowledged U.S. consumers\u2019 pain.<\/p>\n \u201cBeginning last year we warned of a more discriminating consumer, particularly among lower income households\u2014and as this year progressed, those pressures have deepened and broadened,\u201d CEO Chris Kempczinski said during Monday\u2019s earnings call<\/a> with investors.<\/p>\n Fast-food prices have historically been a delicate subject for cash-strapped costumes, Zagor said. When consumers feel pinched\u2014particularly lower-income consumers who are hit harder<\/a> by higher inflation\u2014food becomes a particularly sore spot.\u00a0<\/p>\n \u201cWe buy food as an emotional experience,\u201d he said, \u201cmuch more than most other products that we buy.\u201d<\/p>\n Because McDonald\u2019s serves consumers on the tightest budgets, its customers are likely to be the most \u201cemotionally reactive\u201d to ruminations from political candidates about the state of the economy, as well as higher food prices, Zagor said.<\/p>\n An imminent election being to blame for fast-food sales woes isn\u2019t unprecedented. In 2016, fast-food companies also reported feeling pinched by the political climate, with some CEOs going so far as to attribute poor sales to the election season.<\/p>\n \u201cWhen a consumer is a little uncertain around their future and really trying to figure out what this election cycle really means to them, they\u2019re not as apt to spend as freely as they might have even just a couple of quarters ago,\u201d CEO Todd Penegor said in August 2016<\/a>.<\/p>\n CEOs of Yum! Brands<\/a>, which owns KFC<\/a> and Taco Bell, as well as Starbucks<\/a>, both made similar comments<\/a> about election unrest impacting sales. Even McDonald\u2019s then-CEO Stephen Easterbrook noticed the trend.<\/p>\n \u201cThere\u2019s just a broader level of uncertainty in consumers\u2019 minds at the moment, both trying to gauge their financial security going forward, you know, whether through elections or through global events, people are slightly mindful of an unsettled world,\u201d he said in a July 2016 earnings call<\/a>.<\/p>\n McDonald\u2019s did not respond to Fortune<\/em>\u2019s request for comment.<\/p>\n Though inflation is cooling, consumers may still not quickly internalize that and change their shopping patterns on a monthslong delay, Zagor said.<\/p>\n \u201cIt\u2019s just a matter of time,\u201d he said. \u201cMcDonald\u2019s is playing the waiting game, appealing to customers still feeling the pinch, even if you know that grip is kind of loosening. Nine months from now, or whenever, we\u2019ll start to kind of see a turnaround on an industry level.\u201d<\/p>\n McDonald\u2019s has experienced troubled waters before. Prior to Kempczinski helming the company in 2015, McDonald\u2019s was struggling to compete<\/a> with concepts like Shake Shake and Chipotle<\/a>. Kempczinski advocated for paring back the chain\u2019s menu and streamlining international operations. In 2019, it had done over $100 billion in total sales.<\/p>\n The fast-food chain\u2019s current slumping form will likewise be short-lived, Zagor argued. The signs are already there: McDonald\u2019s $5 Meal deal introduced in June as a limited-time promotion was extended through August<\/a>. The company said in its Monday earnings that sales for the meal bundle have exceeded expectations. After the promotion was announced, foot traffic to U.S. stores significantly increased<\/a>.<\/p>\n \u201cIt\u2019s going to be a blip,\u201d Zagor said. \u201cThey\u2019re going to come back. They always come back.\u201d<\/p>\n<\/div>\n\nThe vibecession hits fast food<\/strong><\/h2>\n
The McSlump won\u2019t last<\/strong><\/h2>\n