By Evie Liu

The outlook isn't bright for earnings from McDonald's, which is scheduled to report its results before the market opens on Thursday.

The consensus call among analysts tracked by FactSet is that the fast-food company will post $2.66 in earnings per share, down 1.4% from a year earlier, for the first quarter of 2025. Total revenue is expected to decline 1.1% to $6.1 billion.

McDonald's stock has been holding up well as the stock market has fallen in response to President Donald Trump's tariff announcements. The shares are up 10% year to date, trading near their record closing high of $321.29, reached on March 7.

When recession hits, prompting consumers to rein in their spending, people are more likely to opt for affordable fast food. But investors need to be cautious. If conditions get too bad, people can cut out restaurant meals altogether. And there is always the risk that diners will shift to more expensive places if they consider those a better experience.

That is what happened in 2024, when fast-food chains raised prices too much and drove their customers away. Fast-casual chains such as Chipotle Mexican Grill and casual restaurants like Chili's have been attracting more diners despite higher prices.

Many fast-food companies have announced deals to lure customers back. McDonald's, for example, launched a new McValue platform that features all-day deals, from the "buy one, add one for $1" offer to the popular $5 meal deal.

Those seem to be working. In the fourth quarter of 2024, same-store sales at the fast-food chain finally rose from a year earlier. They had fallen from a year earlier for two straight quarters.

The momentum might have faded already, though. Worry about the Trump administration's tariffs and cuts to government spending have led to fear of a recession. That may have contributed to a decline in foot traffic at McDonald's.

Visits to McDonald's were down 2.6% from a year earlier during the first quarter, compared with a drop of 1.4% for the entire retail and dining sector, according to Placer.ai, a data company that tracks visits to retailers and restaurants.

Write to Evie Liu at evie.liu@barrons.com

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April 30, 2025 16:16 ET (20:16 GMT)

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