McDonald's CEO says customers are more worried about the economy than public health, as the fast-food giant braces for the looming recession

• McDonald's CEO Chris Kempczinski said that customers are more worried about the economy than public health, citing the fast-food giant's recent polling.
• "I'm certainly not qualified to make any predictions around if we're going to be in a recession or not, but I'd certainly say there are a lot of warning signs out there," Kempczinski said.
• Kempczinski said McDonald's is exploring affordability and value, meaning the chain will likely roll out new deals to win over customers during the global recession.

McDonald's is bracing for the looming recession, as the fast-food giant eyes new deals to win over struggling customers.

Economic concerns have now eclipsed concerns about health and public safety among consumers, according to McDonald's most recent polling, CEO Chris Kempczinski said on a call with investors on Tuesday. The fast-food giant surveys consumers in major markets every week, according to the executive.

"I'm certainly not qualified to make any predictions around if we're going to be in a recession or not, but I'd certainly say there are a lot of warning signs out there that suggest that the consumer sentiment and the concern about the economy is negative and going in the wrong direction," Kempczinski said.

McDonald's reported on Tuesday that same-store sales plummeted by 23.9% globally and 8.7% in the US in the most recent quarter. US same-store sales were down 19.2% in April, 5.1% in May, and 2.3% in June.

As McDonald's braces for the ongoing impact of the global recession, Kempczinski said that the company is exploring affordability and value, meaning the chain is likely to roll out new deals in the coming months. The company plans to reinvest the money it did not spend on marketing in the most recent quarter, as well as $200 million in marketing aimed at supporting franchisees, in the second half of the year.

"Some of the shock that sort of went through the system as the pandemic spread, we ended up ... going into more of a defensive posture," Kempczinski said. "Now, as we go into more of a normal .... new normal, next normal — whatever phrase you want to use — operating environment, it's time for us to get back on the front foot."

Kempczinski said on Tuesday that McDonald's is resilient both in recessions and in more positive financial environments. While sit-down, casual dining chains often suffer during recessions, fast-food chains such as McDonald's are better positioned to win over budget shoppers. Even prior to the pandemic-induced recession, a crucial part of McDonald's strategy has been attracting customers who cannot afford more expensive options.

McDonald's customers' financial struggles are already impacting the fast-food giant's bottom line. Kempczinski said on Tuesday that McDonald's business was boosted by the extra $600 weekly unemployment benefits and that the company expects a "negative implication" if payments were to stop or decline.