McDonald’s is banking on burgers and fries to tell a bigger story about the American economy. Chief executive Chris Kempczinski is slimming down the cost of the fast-food giant’s value meals as he grapples with what he calls a “two-tier economy”—a widening divide between consumers who are still spending freely and those who are pulling back.
For years, dating back to the 2022 inflation wave, McDonald’s and its fast-food rivals have contended with shopper frustration over rising menu prices, with combo meals increasingly breaking into double digits. Customers at the higher end of the income spectrum continue to order premium products and use delivery apps at healthy rates. Lower-income diners, however, are cutting back, Kempczinski argued in an interview on CNBC’s Squawk Box, treating fast food less as a daily convenience and more as an occasional splurge. He told the anchors that McDonald’s has been on a “value journey” over the past year or so.
“Particularly with middle- and lower-income consumers, they’re feeling under a lot of pressure right now,” Kempczinski told the CNBC anchors. ”There’s a lot of commentary around, ‘What’s the state of the economy, how’s it doing right now?’ And what we see is, it’s really kind of a two-tier economy. If you’re upper-income, earning over $100,000, things are good … What we see with middle- and lower-income consumers, it’s actually a different story.” He cited traffic for these demographics being down double digits, and they’re skipping breakfast or eating at home.
Kempczinski was pressed on some political issues by the CNBC anchors, including whether McDonald’s fits in with HHS Secretary Robert F. Kennedy’s MAHA (Make America Healthy Again) goals, and the policy around no taxes on tips. Kempczinski said he personally supported the no taxes on tips policy, but clarified that it didn’t help McDonald’s much, as it doesn’t allow tips. A tips restaurant requires a minimum wage of just $2.13 per hour, he added, which hasn’t changed since 1991, calling this an “uneven playing field” as “you’re essentially getting the customer to pay for your labor,” plus the tax-free benefit. He called for one federal minimum wage for all kinds of restaurants, and then said McDonald’s was “open” to raising the federal minimum wage, adding that the company was “in dialogue” with the White House about several issues including this one.
The current federal minimum wage in the United States is $7.25 per hour, a rate that has gone unchanged since July 24, 2009. This long-standing rate has held for over 16 years without a federal increase, the longest period in U.S. history without an update to the minimum wage. However, many states and localities have adopted higher minimum wage rates, some reaching as high as $18 per hour, such as in the District of Columbia.
In 2025, significant new legislation called the Raise the Wage Act was introduced in Congress. This proposed law would incrementally increase the federal minimum wage to $17 per hour by the year 2030, phasing out subminimum wage rates for tipped workers, workers with disabilities, and youth workers. Additionally, a Senate bill was proposed to raise the minimum wage to $15 per hour starting Jan. 1 of the first year after its passage. These legislative efforts indicate active momentum at the federal level to increase the minimum wage after more than a decade of stagnation.
Different from the Great Recession
Kempczinski added that this isn’t like what McDonald’s saw during the Great Recession, “when everyone traded down.” And so McDonald’s has to be creative to play both sides of the issue. Increased accessibility for lower-income consumers now comes in the form of a revamped $5 meal bundle, along with more aggressive price promotions in flagship markets. Advertising campaigns are leaning heavily on the theme of value, a message designed to resonate with cost-conscious families forced to make sharper trade-offs in their daily spending.
The strategy underscores a balancing act for McDonald’s. As one of the few global chains with the size and procurement power to cut prices without immediately crippling profitability, the company can play offense where smaller rivals cannot. Still, franchisees—who operate most U.S. locations—are wary that thinner price points could turn into margin squeezes just as wages, rent, and insurance remain high. Still, Kempczinski told the CNBC anchors that the move toward more value was “almost unanimous” among franchisees, to a surprised reaction.
The broader retail picture
McDonald’s dual-track strategy echoes a broader split visible across much of the U.S. economy. Big-box retailers like Walmart and Target report a similar trend that Dollar General CEO Todd Vasos put his finger on in March: “Many of our customers report that only have enough money for basic essentials.” Delta Air Lines, a proxy for demand among the affluent consumer cohort, has largely gone from strength to strength as America’s most profitable airline, although it has lowered guidance during 2025, owing to uncertainty from the Trump tariff regime.
The trends recall an economic pattern established during the pandemic: the “K-shaped” economy. As Gregory Daco, chief economist at EY-Parthenon, explained to Fortune in 2023, this means that middle and lower-income consumers are one leg of the “K,” pointing down and to the right, while the upper-income cohort is doing better and better.
McDonald’s, though, has to master the “K” to get the most out of its consumers. That means fighting to maintain its decades-old position as the go-to spot for an affordable meal, even as it courts higher-margin opportunities to keep shareholders satisfied. Whether that balancing act proves sustainable may depend on just how long America’s two-track consumer economy sticks around.
For this story, Fortune used generative AI to help with an initial draft. An editor verified the accuracy of the information before publishing.
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