McDonald's Is Losing Low-Income Customers to Burger King

McDonald's sales among low-income customers fell 2.4% year over year in its most recent quarter, according to consumer-behavior analytics firm Numerator, which defines "low-income" households as those earning $40,000 a year or less. It's McDonald's first quarterly decline in that segment in the past year, equal to roughly $310 million in lost sales.

Rival Burger King, meanwhile, posted 0.3% growth in the same segment over the same period. It's further evidence that McDonald's is struggling to hold on to price-sensitive customers, especially as the economy follows a "K-shaped" pattern in which the gap between wealthier and lower-income consumers keeps widening.

McDonald's has long courted price-sensitive customers with deals like "buy one, get one" offers on sandwiches such as the Big Mac. But the company has struggled to gain traction with a newer value menu featuring items under $3. CEO Chris Kempczinski told analysts on an earnings call earlier this month: "We've restored our overall value and affordability leadership, but our restaurant-level results show uneven execution across the system."

The company's U.S. comparable sales growth slowed to 0.8% in the second quarter. Rivals from Burger King to chains like Chili's are posting stronger results by leaning into their own value menus and promotions. Not all the news is bad, though — according to Numerator, a fried apple pie item brought back for America's 250th anniversary was purchased by 11.7% of U.S. households, suggesting it resonated with customers across every income level.