Competitive Corner

Burger King is beating its category by a lot - QSR Magazine

Wendy's new CEO laments the brand's quality degradation - Maze

Coming to a Site Near You

Another factor that will make the third quarter of this year more challenging for McDonald's USA will be the number of new store openings. Historically, McDonald's opens 50% of the year's new stores in the last quarter of the year. It's just human nature to procrastinate and then rush to complete projects by year's end, whether at corporate or at your local building department. 

Of course, these new stores will impact nearby stores' sales for the quarter. Fourth-quarter new stores are either under construction or are permitted and soon to break ground.

One Lap at a Time

As the autopsy of MCD Q2 winds down, USA McDonald's Owner/Operators should give some consideration to the next few calendar quarters. 

The third quarter is not too challenging since the USA was up a few percent in 2025 over 2024. But the fourth quarter will be a real challenge. The same-store sales increase from 2024 to 2025 was 6.8%. That's a tough number to lap.

The years go by fast, and we forget events. Here's what analyst Mark Kalinowski wrote about MCD Q4 2025:

January 27, 2026

"While McDonald’s U.S.’ Q4 2025 same-store sales appeared to have started off slowly thanks to what appears to have been an underperforming (at least underperforming relative to our expectations) Monopoly promotion. However, once McDonald’s started lapping meaningfully easier comparisons from the end-of-2024’s food-safety incident, trends likely improved. In addition, the early December Grinch Meal promotion appears to have been a resounding success. On top of all this, throughout the quarter, McDonald’s seems to be doing a better general job of promoting value to quick-service consumers, or at least it’s doing so notably better than some other large, quick-service burger concepts are. All in all, and based in part on our survey responses, we leave unchanged our +5.2% projection for McDonald’s U.S. same-store sales in Q4E. Sell-side consensus (according to Consensus Metrix) has ticked up to +4.8% in recent weeks."

Will management panic and throw everything against the wall like they did in the recent quarter? Of Course they will.

Will the Owner/Operatrors refuse to go along and only participate in a reasonable amount of discounting and promotion? We will see.

Everyone's Asking: What's Happening in McChina?

From the article:

"As its store count surpasses 8,000, global fast-food giant McDonald's is facing unprecedented growth anxiety in the China market. Despite sprinting ahead at a pace of nearly five new stores per day in the first half of this year, declining same-store sales and an increasingly crowded playing field are putting its "volume over price" expansion logic under severe strain."

McDonald's China trapped in Thousand-Store Siege

We Have a Huge Same Store Sales Problem - Let's Solve it by Opening More Locations

McDonald's slams the brakes on new store growth - The Street

Too Much Marketing Hurt McDonald's

Jonathan Maze does his usual fine job of recapping yesterday's MCD conference call.

Chris K. says: “We don’t have a strategy problem,” he added. “We simply didn’t execute at the level we needed to in the second quarter.”

In other words: There's nothing wrong with what we're doing - we're just doing it wrong. 

McDonald's Admits its Value Meals Have Become too Confusing

McDonald's executives conceded on Tuesday that recent discounting initiatives haven't always worked out and have even turned away some of the restaurant's biggest fans - Morningstar

McDonald's Q2 Earnings Call Transcript

I know few bother with these calls but a lot of the discussion is about the USA - Seeking Alpha

New Pres for McDonald's USA

McDonald's makes a big change in its sluggish U.S. market - Maze

Anonymous Submission on Excessive Discounting

Excessive or frequent discounting often erodes consumers’ perception of a product’s value and quality over time, even if it boosts short-term sales. Price serves as a key quality signal, and heavy or constant discounts disrupt that signal, lower reference prices, and condition buyers to view the product as less worthwhile at full price.

Price as a Quality Cue and Quality Skepticism

Consumers frequently use price as a proxy for quality, especially when they cannot easily evaluate the product beforehand. Large discounts can trigger “quality skepticism.” Buyers may wonder what is wrong with the item that it needs such a steep markdown,  or is inherently lower quality.

Research and industry observations show that discounted products are often perceived as lower quality than identical full-price versions.  Frequent discounting reinforces the association between the brand and lower quality.

Shifting Internal Reference Prices

Consumers form an internal reference price based on past observations. When discounts occur often or deeply, the promotional price becomes the new normal (or “anchor”). Full price then feels inflated or like a loss, reducing willingness to pay it.

Classic examples include retailers whose constant promotions trained shoppers to buy only on deal, ultimately damaging the business when regular-price sales collapsed. Frequency and depth both matter: deep discounts at high frequency lower reference prices .

Brand Equity Dilution and Devaluation

Excessive discounting sends signals of weakness or desperation (“the product wasn’t worth the original price”). It can commoditize the brand, shifting focus from unique benefits, quality,  craftsmanship, to pure price competition. Premium positioning is especially vulnerable—once eroded, it is hard and slow to rebuild.

Loyal full-price customers may feel disillusioned or “punished” for buying earlier at higher prices. Over time, the brand becomes associated with deals rather than value, attracting more price-sensitive, lower-lifetime-value customers who switch easily for better promotions.

Conditioning Deal-Seeking and Reduced Loyalty

Shoppers learn to wait for the next sale, delaying purchases and making full-price periods slower. This “discount conditioning” or promotion addiction raises price sensitivity across the board. Discount-acquired customers often show lower average order values, lower repeat rates, and substantially lower lifetime value

Other Related Effects

Expectancy effects: Lower prices can prime lower expectations, sometimes making the product feel less effective or enjoyable (supported by studies ).

Category-level damage: Aggressive discounting has led consumers to doubt overall product quality and prefer “aptly priced” alternatives.

Sadly, McDonald's has not learned this lesson.