McDonald's recorded the first global sales decline since 2020 in the second quarter of 2023, as customers worldwide became more cautious with their spending due to increased costs for burgers, fries, and soft drinks. The fast-food chain's comparable sales decreased by 1 percent year-over-year, both in international markets and in the USA.

The CEO of McDonald's, Chris Kempczinski, stated during the release of the quarterly results on Monday that consumers are "more discriminatory with their spending." While the quarterly revenue of $6.49 billion remained roughly unchanged compared to the previous year, the net profit fell by 12 percent to $2.02 billion, missing Wall Street's expectations.

Kempczinski reported to analysts that consumer sentiment in most major McDonald's markets is low. 'You can see that consumers are eating at home more often and looking for deals,' he said.

McDonald's is the latest company to report a decline in demand, raising concerns that consumers, after years of supporting the world's largest economy since the pandemic, may now be reaching their limits.

The prices for restaurant meals have risen significantly in recent years. A U.S. index for food consumed outside the home has recorded a 30 percent increase since mid-2019. At the same time, households that still had a lot of cash after the pandemic lockdowns are starting to cut back on their spending.

McDonald's, which often attracts customers switching to relatively affordable food, has also raised prices. Joe Erlinger, President of McDonald's USA, stated in an open letter in May that the average price of a Big Mac Meal has increased by 27 percent since 2019 to $9.29. However, he mentioned that the costs of many menu items have been outpaced by inflation.

At the end of the day, we expect that customers will continue to feel the economic pressure and higher living costs for at least several more quarters in this very competitive landscape," Erlinger told analysts on Monday.

To win back customers, McDonald's and its competitors are now offering discounts. A $5 deal for a sandwich, chicken nuggets, fries, and a drink that McDonald’s introduced at the end of last month in the USA increased foot traffic, according to Placer.ai, which tracks location data from mobile devices.

McDonald's operates over 40,000 restaurants in more than 100 countries. About 41 percent of last year's revenue of $25.5 billion came from the USA.

Nevertheless, the lower customer frequency in the second quarter led to a decline in comparable US sales by 0.7 percent. International sales also fell by more than 1 percent. The company recently warned that the war in Gaza has affected its business in some countries in the Middle East as well as in Indonesia and Malaysia. Sales were also down in France and China, where McDonald's faces aggressive competition.

The global decline in comparable sales, affecting both company-owned and franchise-operated restaurants that have been open for at least 13 months, marks the first decline since the last quarter of 2020.

McDonald's shares closed up 3.7 percent on Monday as the market reacted to the "slightly better than feared" sales decline, said Citigroup. Investors had pushed McDonald's shares down 15 percent for the year through Friday. Morgan Stanley noted in an outlook on the results that the company's "value reputation" with consumers had weakened and that it needed offers like $5 meals "to appeal to an important customer group that has pulled back.