By Evie Liu

A consumer activist group is calling for a week-long boycott against McDonald's, accusing the Golden Arches of tax avoidance, lobbying against wage increases, and rolling back diversity practices.

Although a seven-day protest can't rattle the 84-year-old fast-food giant of burgers, fries and dividends, it's adding to the list of worries it has to face and could potentially dent its second-quarter earnings coming in July. The bigger risk: The boycotts could last longer than a week if consumers are on board, and turn into a long-term brand crisis, like some other big corporations are already seeing.

The People's Union USA, a grassroots advocacy group, is urging a nationwide boycott against McDonald's that will last from June 24 to June 30 as part of a broader campaign that calls for economic resistance, corporate accountability, and justice for the working class.

"They exploit tax loopholes and do not pay their fair share. They engage in price gouging while wages stay low. They suppress workers' rights and union efforts. They support political figures who threaten democracy. They practice performative DEI with no meaningful change. They prioritize profit over people, community, and truth," wrote John Schwarz, founder of the group, in a recent Instagram post.

McDonald's didn't immediately respond to a request for comment.

Target has been a target of similar boycotts since February this year after it announced the dismantle of its diversity, equity, and inclusion efforts. Weekly store traffic began slumping since then, according to Placer.ai, a data company that tracks retail foot traffic.

In its annual report this March, Target acknowledged that there had been an "adverse reactions" to changes in its DEI initiatives. Last month, the retailer posted first-quarter revenues that missed analyst expectations by nearly half a billion dollars and were down 2.8% year over year. Comparable sales fell 3.8% from a year ago.

Target's share price has fallen nearly 30% since the beginning of February. Management now expects total sales to fall in the low single digits this fiscal year, reversing its earlier projection of 1% growth.

McDonald's could face the same risk. Investors already have plenty to chew on. Last month, the fast-food chain reported first-quarter revenue of $5.96 billion, down 3.5% year over year, while adjusted earnings slipped 1% to $2.67 per share. Global comparable sales fell 1% from a year ago, mostly driven by negative guest counts in the U.S. market, according to the firm.

McDonald's stock touched a record $326 in March, but has been falling over the past few weeks as earnings weakness weighed on investor sentiment. At $289 on Monday, shares are down almost 10% in the past month.

Further headwinds could lead to more losses. Even after the pullback, McDonald's stock trades at 23 times forward earnings, a premium to peers like Wendy's and Yum Brands.

The looming boycott adds to a growing list of headaches. Beef prices soared as cattle herd size fell to historical lows following drought conditions, while California raised fast-food workers' minimum wage by 25% to $20 an hour. The company raised menu prices aggressively over the past few years. Consumers are pushing back, dining out less at fast-food restaurants.

Last year, McDonald's rolled out a $5 Meal Deal along with other value offers, hoping that the deals would attract cash-strapped diners back in stores. The discounts worked to a certain extent. In the fourth quarter of 2024, same-store sales finally rose from a year earlier after falling for two straight quarters.

But first quarter's numbers suggest the momentum might have faded already, and an organized walk-out -- even just for one week -- could be painful for the firm. McDonald's second-quarter ends on June 30. The boycott's timing is tailor-made to show up in the July earnings release. A 10% dip in one-week traffic, out of 13 weeks, could dent the U.S. sales by nearly 1%.

McDonald's large international exposure and franchise model could help diffuse the impact. Still, with investor sentiment already down, any bad news -- another quarter of negative sales growth or simply missing Wall Street's expectation -- could invite fresh valuation collapse. McDonald's is set to report its next earnings in late July.

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

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June 23, 2025 16:03 ET (20:03 GMT)

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