(Bloomberg) — McDonald’s Corp. faces a key challenge as it fights to reinvigorate a sagging stock price: Winning back the cost-conscious diners who believe its menu has become too expensive.
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Shares of the Big Mac maker are down nearly 31% from their February high and on track for their worst annual return since 2002. The burger chain guided for “slightly negative” US sales for the current quarter during an investor day event earlier this week, while sales last quarter rose just 0.8%, their slowest pace in more than a year.
Those signals come alongside longstanding gripes from customers, who have complained about everything from menu prices to an in-store experience that has suffered from the loss of playgrounds and other popular features. Recent attempts at value offerings have had mixed results, while an $8.5 billion multiyear plan to improve service and food quality announced this week raised concerns that it would erode profits, sparking a fresh selloff in the company’s shares.
“Their prices have gone up substantially, and it’s no longer viewed as the best value in food,” said Jacob Aiken-Phillips of Melius Research, who has the lone “sell” rating on the stock among analysts tracked by Bloomberg. “I could go to Texas Roadhouse instead and have an actual sit-down experience with my family that’s not that much more expensive.”
A McDonald’s spokesperson on Friday reiterated the company’s plans to act with urgency to put the US business in a stronger position exiting 2026.
In 2024, McDonald’s hit back at social media posts criticizing rising prices: One widely circulated post showed a Big Mac meal costing $18, which McDonald’s said was from one location in the US out of more than 13,700. That year also saw a boost from $5 meal deals, as the burger chain looked to counter perceptions that its food had gotten too expensive.
The Economist’s Big Mac Index, typically used as a way to compare purchasing power parity between countries, shows that the price of the sandwich in the US has risen by around 23% between 2019 and the end of 2025.
Price Increases
McDonald’s began hiking its menu prices after the pandemic to offset surging costs for ingredients like beef, rising labor wages and higher fuel.
Meanwhile, customers were also being squeezed by inflation and rising interest rates, making them more selective about where they spend their dollars. The dynamic intensified competition within the restaurant industry, with chains vying for customer traffic by dangling limited time offers and enticing shoppers with aggressive discounts.
While rising prices have hurt restaurants across the board, McDonald’s rivals appear to be faring better, at least for the time being. Restaurant Brands International Inc.’s Burger King posted US comparable sales growth of 8.5% in the latest quarter, exceeding estimates thanks to a revamped Whopper and Star Wars promotion. Yum! Brands Inc.-owned Taco Bell reported a 7% increase in same-store sales as its $5, $7 and $9 meal boxes drove customer visits.
The companies’ shares are up 5% and down 8.4% year-to-date, respectively — underperforming the S&P 500’s gain of 13%. McDonald’s shares, by comparison, are down 23% year-to-date.
Investors see misalignment with franchisees as another reason for lackluster sales. Franchisees have pushed back against discounts — such as this year’s menu of 10 items under $3 — since they grow sales but eat into the profits of operators already navigating higher costs.
About a third of franchisees did not follow pricing guidance, while consumer awareness was below targeted levels for the rollout, Chief Executive Officer Chris Kempczinski said during the last earnings report. Nearly 95% of McDonald’s restaurants are franchised.
Other complaints have focused on less tangible factors. Some once-loyal customers have taken issue with stores they say have lost the magic that made going to McDonald’s a happy childhood memory — especially after the company never reopened many of the playgrounds it had shuttered during the pandemic.
New Initiative
The restaurant’s latest initiative is a response to many of those issues. Dubbed “Next,” it looks to reinvigorate sales through technology investments, restaurant upgrades and plans to gain market share in both the chicken and beverage categories. The company has also unveiled plans to spruce up its PlayPlaces as part of a major restaurant modernization effort.
Seaport Global analyst Eric Gonzalez was encouraged by the move but said it could take at least a year before the changes yielded appreciable results. At the same time, a slew of negative factors including an expected step-up in capital expenditures and near-term pressure on sales are already reflected in the company’s valuation, he said. McDonald’s shares trade well below their average five-year valuation at about 17 times forward earnings.
Through it all, Wall Street has remained mostly positive on the stock. McDonald’s has 24 buy-equivalent ratings, along with 16 holds and just one sell. The average price target implies a 28% return from where shares the shares closed Friday.
Investors now want to see improved food quality and value, as well as signs of a durable recovery in traffic, said Rebecca Walser, chief investment officer at Walser Wealth Management. Her firm currently owns the stock.
“McDonald’s is part of the American parlance: the Happy Meals, the Hamburglar, Ronald McDonald, the PlayPlaces. They need to re-engineer that experience,” said Walser. “We really do believe that McDonald’s will find its way through this.”
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