McDonald's CEO warns of persistent inflation and flat traffic in restaurant industry

McDonald's is predicting that flat traffic and higher inflation will continue to weigh on the restaurant industry, CEO Chris Kempczinski said on Wednesday.

"One of the things I've talked to our team about is we need to stop talking about that being a difficult environment, and just say that is the environment," Kempczinski said on CNBC's "Squawk on the Street." "Because I think, as we look out forward, we're not expecting things to change."

For years, Kempczinski has been warning investors and analysts about the "challenging environment" faced by McDonald's and the broader industry. The burger chain reported U.S. same-store sales growth of just 0.8% in its most recent quarter as traffic to its domestic restaurants fell.

Diners have been eating out less frequently, pushing back against higher menu prices as they face increased costs on everything from gas to groceries. From August 2025 to July 2026, industry operators surveyed by the National Restaurant Association reported a net decline in customer traffic in every month but one.

To attract customers, McDonald's and its rivals have leaned into discounts. But diners aren't the only ones facing higher costs.

Restaurant operators — like McDonald's and its franchisees — have seen beef prices soar. Kempczinski said that beef costs have nearly doubled over the last five years in the company's biggest markets. Other expenses, like labor and construction, have also ticked higher, putting more pressure on margins.

"Across the board, we're seeing that inflation is sticky," Kempczinski said. "It's sticky, not just in the U.S., but around the world."

Faced with tougher operating conditions, McDonald's is focusing on stealing diners from its rivals.

"The biggest thing that you need to do in an environment like this is you have to be able to earn share," Kempczinski said. "You have to be able to actually grab growth from your competitors."

Kempczinski and other McDonald's executives will share more details about the company's plans to gain market share during its investor day on Wednesday.