McDonald’s expects more of the same from the economy in 2026 | Photo courtesy of McDonald’s.
November was another not-so-good month for the fast-food business. Quick-service restaurant traffic fell 2.9% last month, according to data from Revenue Management Solutions, confirming comments from a number of operators.
Weak industry sales in October and November could be the result of the government shutdown, which added yet another in a series of mini-shocks to the economy that have hurt consumer confidence. The Consumer Confidence Index fell sharply to its lowest level since April, according to The Conference Board, which might be the result of the event.
Consumers have been jittery all year. Inflation has hurt consumer buying power. They see fast-food prices considerably higher than they were a few years ago and they cut back. They can be lured to fast-food chains with special Spongebob or Grinch promotions or when Starbucks introduces a new bear-shaped cup, but they cut back during other periods.
That has challenged numerous executives, leading to reorganizations, CEO changes, valuation declines, stock market declines, record LTOs and more value offers than ever before. We think bankruptcies are probably inevitable.
Prognostications I’ve seen have suggested that 2026 will be better. And after all, how could it get worse? At the very least easier comparisons during random parts of the year should at least make industry same-store sales and traffic appear better. In theory, a few tax breaks for certain consumers could help, too.
But at the same time, we continue to encounter a host of consumers who complain about prices at various restaurant chains. Industry traffic and sales have on multiple occasions taken a hit this year following shocks to consumer confidence.
McDonald’s, something of an industry bellwether, is writing value into its franchising standards and has suggested that it expects more of the same in 2026 than the industry experienced in 2025.
The U.S. Federal Reserve didn’t provide much in the way of comfort on this front this week, suggesting that it could take a sustained period of wages growing at more than the rate of inflation.
“We’re going to need to have some years where compensation is higher,” Fed Chairman Jerome Powell said in his press conference after the agency lowered interest rates. “We’re trying to keep inflation under control but also support the labor market and strong wages so that people are earning enough money and feeling economically healthy again.”
That isn’t happening yet, at least at restaurants.
In September, for instance, food-away-from-home prices rose 3.7%. Yet wages were up 3.5%, according to federal data. That sort of gap, no matter how small, has a tendency to keep people out of restaurants.
And the U.S. consumer has been hit by a lot these past few years. Inflation in recent years has hit many of them hard. They are paying back student loans. Housing costs a lot more than it used to. Prices on everyday goods remain far higher than they were a few years ago. And despite a price war unlike anything we’ve seen in years, they are paying higher prices at restaurants.
All of which is to say that operators should be prepared for another tough year in 2026, unless something happens that can change the consumer spending equation. Because the simple fact is, many consumers simply don’t have the buying power that they once did, and they have to act accordingly.
