McDonald’s (MCD) is one of the strongest companies of all time thanks to its golden arches, global reach, and solid dividend history. As a result, the company usually grabs attention for good reasons, but early 2025 has been different. 

After starting the year strong, McDonald’s first-quarter results showed U.S. same-store sales dropping 3.6%, the worst decline since 2020. This news pushed the stock down almost 2% on May 1.

The timing feels especially disappointing because McDonald’s stock had been doing quite well, gaining 7.8% year to date compared to the S&P 500’s ($SPX) 4.1% decline. Still, McDonald’s holds its spot as the world’s largest fast-food chain, with a market cap of over $220 billion and more than 40,000 locations in over 100 countries.

However, this unexpected stumble has investors taking a fresh look at the company’s future. Many are now asking an important question: Is this just a temporary dip to buy into, or does it point to bigger problems for one of the world’s best-known brands? Let’s find out.

What Q1 Results Reveal About McDonald’s Health

McDonald’s (MCD) runs the biggest fast-food chain in the world, serving millions of people every day in over 40,000 locations. The company keeps rewarding its investors with steady dividends, paying out $7.08 per share each year, which gives a yield of 2.27%. McDonald’s has raised its payouts every year for 49 years, earning it a spot on the coveted Dividend Aristocrats list. 

On May 1, McDonald’s released its first -quarter results, and the numbers got people talking. Global comparable sales dropped by 1%, and in the U.S., sales fell by 3.6%, which is the biggest drop since 2020. 

International developmental licensed markets did better, growing by 3.5%, but International operated markets also slipped by 1%. These numbers show that while McDonald’s is strong worldwide, it’s facing some challenges at home.

The financials reflect these bumps. Revenue decreased by 3% and systemwide sales dropped 1%. 

Operating income fell by 3% (1% in constant currencies), and diluted earnings per share came in at $2.60, down 2%. If you leave out $0.07 per share in restructuring costs, adjusted earnings were $2.67 per share. 

Even with these issues, the loyalty program is still a bright spot, bringing in more than $31 billion in sales from 60 markets over the last year and about $8 billion just in the first quarter.

Despite these mixed results, CEO Chris Kempczinski is still upbeat.  He points to the company’s “70-year history of innovation, leadership, and proven ability to adapt” as strengths that will help McDonald’s “handle even the toughest market conditions and win more customers.”

McDonald’s Strategic Initiatives

McDonald’s recent earnings might have made some people nervous, but the company is doing a lot behind the scenes to keep moving forward. In January 2025, McDonald’s decided to keep working with Cognizant (CTSH) to update its systems around the world. 

In partnership, the two companies are using things like artificial intelligence and cloud technology to make jobs like finance, payroll, and franchise management run smoother. The goal is to make things faster and more efficient, especially as more locations start using automated ordering and other digital tools.

At the same time, McDonald’s has been working hard to give customers more value for their money. The new McValue menu, which rolled out nationwide in early January 2025, is all about helping people save. 

The company is also relying on promotions like deals with WWE star John Cena to help get the word out. There are also app-only deals, like free fries with a $1 purchase every Friday and a free McCrispy sandwich for new app users, all designed to keep people coming back and using the app.

In March 2025, McDonald’s set up a new Global Restaurant Experience Team. This team is looking at everything from store design to mobile ordering and personalized marketing. With digital sales getting close to $9 billion a year, making the customer experience better could help McDonald’s keep loyal fans and attract younger customers, which is key for steady growth.

How Analysts See McDonald’s

Most analysts are looking past this rough patch and expect things to pick up soon. For the current quarter ending June 2025, analysts think McDonald’s will earn about $3.11 per share, up from $2.97 last year, which means a 4.71% jump. For the whole year, they expect earnings of $12.21 per share, up from $11.72 last year, showing a 4.18% increase.

The 35 analysts surveyed agree on a “Moderate Buy” consensus rating, which shows they still trust McDonald’s long-term strength. The average price target is $331.74, about 4.7% higher than the current price. 

Conclusion

The big question now is whether McDonald’s can turn its value deals and new menu ideas into more customers and better sales. Most analysts believe the answer is yes, but they’re keeping a close watch for proof in the upcoming reports. This recent dip looks more like a chance to buy than a reason to worry. With new technology, value meals, and strong analyst backing, the stock is more likely to bounce back than keep falling, especially if shoppers start feeling better about spending.