McDonald's battles ‘fierce' Aussie competition as global sales drop
The famous golden arches might be losing their glow, with McDonald's recording a surprising drop in global sales as the fast-food giant battles 'fierce' competition in Australia.
McDonald's reported a one per cent fall in global comparable sales in the first quarter of the year compared to the same period in 2024, which included a Leap Day.
In its US birthplace, McDonald's recorded a 3.6 per cent decline in sales – marking the biggest sales drop since the pandemic, when restrictions were in place.
McDonald's attributed a decrease in the number of comparable customer transactions at restaurants as a major factor behind its decline in US sales.
McDonald's Chairman and CEO Chris Kempczinski said customers were 'grappling with uncertainty'.
'McDonald's has a 70-year legacy of innovation, leadership, and proven agility, all of which give us confidence in our ability to navigate even the toughest of market conditions and gain market share,' Mr Kempczinski said.
McDonald's recorded a 3.6 per cent decline in sales in the US. Picture: Charly Triballeau/AFP
In Australia, research suggests the fast-food giant's sales are rising, with market research firm IBISWorld estimating McDonald's sales to be $5.7 billion in 2024-2025, compared to $5.4 billion in 2023-2024.
But it's not all good news, with the fast-food giant having to fight off hungry competitors eating into its market.
'While absolute sales figures might be rising, it is anticipated that McDonald's is losing market share to other fast food providers in Australia,' IBISWorld Industry Team Leader Disha Jeswanth told news.com.au, adding 'McDonald's faces fierce competition from several sources'.
'Within the fast food segment, the main differentiator is price in terms of value for money.'
According to IBISWorld, McDonald's market share has consistently dropped from 21.5 per cent in 2021-2022 to 19.3 per cent in 2024-25.
McDonald's is fighting off hungry competitors eating into its Australian market. Picture: Glenn Campbell
Aside from competing against KFC, Dominos as well as burger joints of the likes of Hungry Jack's and Grill'd, McDonald's is also facing off with Mexican food brand Guzman y Gomez (GYG) which has proven itself to be a 'major emerging competitor'.
'Guzman y Gomez is capturing market share through its perceived healthier food offerings,' said Ms Jeswanth.
'While a large burger meal at Maccas is averaging above $15 these days, GYG is offering a burrito bowl for a similar price. The brand is also marketing its use of free-range chicken and high-quality ingredients.
'GYG's next move involves expanding into drive-thru operations, which will further weigh on McDonald's demand.'
'Grill'd, on the other hand, although it doesn't compete with Maccas on the basis of price, is offering gourmet burgers that are often a healthier choice.'
To counter this, Ms Jeswanth notes McDonald's has continued sourcing over 90 per cent of its ingredients locally and using 100 per cent RSPCA-approved chicken.
'McDonald's also provides nutritional information with its food orders to maintain transparency. However, public perception around McDonald's food quality remains a challenge.'
Guzman Gomez is a major emerging competitor against McDonald's. Picture: NewsWire/Gaye Gerard
Jump in price
An increase in prices, as other restaurants have done amid rising cost-of-living and inflation, have also hurt McDonald's reputation.
'McDonald's value proposition has long centred on providing affordable meals, appealing especially to budget-conscious consumers,' said Ms Jeswanth.
'However, consistent price increases in recent years, driven by rising input costs and wages have eroded this perception of value.'
The price of a large fries has increased by more than 50 per cent since 2019, from $3.20 to $4.85 as of this month, while a classic Angus burger is up more than 25 per cent from $7.95 to $10.
The increase has come at a time when cost-of-living pressures has changed Australians' spending habits.
'Lower-income households and younger consumers are extremely cautious of their discretionary spending', said Ms Jeswanth.
McDonald's has seen an increase in prices in recent years.
According to Finder's Consumer Sentiment, only 61 per cent of Australians reported spending money on food delivery or takeaway services per week in May 2025, compared to 68 per cent in May 2022.
'The cost of living is putting significant pressure on household budgets, and one area many Australians are cutting back on is non-essential spending such as takeaway,' Graham Cooke, head of consumer research at Finder told news.com.au.
'Fast food prices of some menu items at McDonalds have been rising faster than inflation.
'At the same time, local fast-food brands have diversified their offerings.'
'When groceries, energy bills, and housing costs rise, the convenience of restaurant-prepared meals becomes a luxury that is harder to justify for many individuals and families,' he added.
'What might have been a weekly or even bi-weekly habit could shift to a monthly treat or only for special occasions.'
X
Low customer satisfaction
According to Sydney-based Fonto, which conducts weekly surveys of customer experiences at 19 Quick Service Restaurants (QSR) across Australia, McDonald's consistently underperforms on customer satisfaction compared to other brands across the last 16 months.
In the first quarter of the year ending in April, McDonald's scored 69 per cent overall satisfaction – a drop from 71 per cent compared to the same period last year.
Out of the top 15 brands, the fast-food giant was ranked last in the first quarter of this year.
'We're seeing consistently that McDonald's ranks towards the very bottom,' Fonto CEO Ben Dixon told news.com.au, adding it sits in the bottom third of 19 brands.
Meanwhile, competitors GYG, Crust and Grill'd made up the top three brands for overall satisfaction.
'They're really focusing on fresh and healthy, they're brands that an athlete would consider buying from, and their prices aren't too far away. The gap in price used to be quite significant between, say, a Grill'd burger and a McDonald's meal, and it's not as big anymore.'
Grill'd beef burgers range from $13.50 to $16.50, according to current prices listed on its website.
In the first quarter of the year, McDonald's ranked 13 for price out of the top 15 brands.
'McDonald's customers have consistently got the least satisfaction with their prices than any of the other brands,' said Mr Dixon.
'So people feel like they're still paying a lot, and the quality is not there for what they're paying.'
Grill'd recorded 88 per cent overall satisfaction among customers surveyed by Fonto between February and April 2025.
Between March 2024-May 2024, Grill'd's overall satisfaction jumped from 85 per cent between to 88 per cent between February and April 2025. Over the same period, McDonald's dropped from 74 per cent to 69 per cent respectively.
Despite the low customer satisfaction, 75 per cent of McDonald's customers told Fonto they didn't consider going elsewhere.
Mr Dixon said one major reason behind this decision is proximity, with McDonald's owning over 1,000 restaurants across the country.
'If you're in a regional or rural area then it's hard to consider going somewhere else if there's nothing for a long way away,' he said.
McDonald's over 1,000 restaurants across the country. Picture: Evan Morgan
But as competitors open more stores the game could change.
Last year, GYG announced its goal to expand its network to over 1,000 stores.
'The question that everyone probably needs to think about is, if every town had a strip, and in that strip was a McDonald's, a Hungry Jack's, a KFC and a Subway, would McDonald's hold the massive market there that it does?' Mr Dixon questioned.
'Or would people move between them because they don't want to eat a burger every night, or because the quality and the satisfaction is not necessarily as high in some of those restaurants?'
The future of fast food in Australia
New competitors such as US-based chicken chain Wingstop – which opened its first store in Australia this month – is also looking to take a bite out of an increasingly crowded market.
'McDonald's has stood the test of time in the Australian market, there is always the risk of losing market share to new competitors,' said Ms Jeswanth.
'International fast food giant Wendy's is set to expand to over 200 locations in Australia over the next decade, proving to be a direct competitor to Maccas.'
To compete, Ms Jeswanth said brands will need to focus on providing premium quality and healthier meals at affordable prices.
'Consumer behaviour is tilting towards sustainable and healthier options, and fast food giants will need to match these preferences (including plant-based options) to remain viable in his highly competitive market,' she said.
The fast food market is predicted to become more crowded in Australia. Picture: Glenn Campbell
'Despite McDonald's loyalty and scale within Australia, the brand will need to focus on bettering its offerings to remain competitive.'
Mr Dixon agrees 'the competition will just get tougher'.
'If I was McDonald's or a McDonald's franchisee, I'd have my work ahead of me,' he said.
'They've got to think seriously about how they reinvent themselves again, or what they do differently to continue to dominate.'
News.com.au contacted McDonald's for comment but was referred to its first-quarter sales data.
Originally published as McDonald's battles 'fierce' competition in Australia as global sales drop
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Sky News AU
2 hours ago
- Sky News AU
Anthony Albanese's major iron ore pitch to Chinese steelmakers
In a display of classic supply and demand salesmanship, Anthony Albanese will flaunt Australian iron ore at a roundtable with China's biggest steelmakers on Monday. The country's behemoth construction industry has slowed in recent years, fuelling fears a downturn in steel production could smash demand for Australian iron ore and threaten jobs as well as the national bottom-line. Both countries have also committed to cleaning up big polluting industries in line with their broader climate goals. With Australia the world's largest iron ore producer and China Australia's top customer, the Prime Minister will make the case for closer co-operation. 'I'm pleased to be here for an important discussion between Australian iron ore miners and Chinese steelmakers,' Mr Albanese will tell the roundtable, according to speech extracts seen by NewsWire. 'Australia and China's iron ore and steel sector partnership has contributed to both countries' economic development for decades. 'Australian miners are reliable and stable suppliers of iron ore, responsible for almost 60 per cent of China's iron ore imports. 'That iron ore goes into Chinese steel production which accounts for over 50 per cent of global supply.' BHP, Hancock, Rio Tinto and Fortescue will all be seated at the roundtable, with Twiggy Forrest among the executives showing up. Nearly 145,000 Australians work in the metal ore mining industry, according to the latest official figures. In 2024, iron ore exports alone were worth north of $150bn. But it is a dirty business in a world scrambling for greener options. 'Steelmaking value chains are also responsible for 7 to 9 per cent of global emissions,' Mr Albanese will say. 'Achieving the goals of the Paris Agreement will require the decarbonising of steel value chains, presenting an opportunity for Australia and China to progress our long-term economic interests.' Mr Albanese will raise the 'challenges' of steel decarbonisation, but aim to reassure both the Australian mining chiefs and the Chinese steel bosses that Australia is willing to front up the cash investments and tweak policies. 'What we need are enabling policy environments, extensive investments in research to develop new technologies, and collaboration across academia, industry and government,' he will say. 'Australia and China each have major stakes in how the decarbonisation efforts develop. 'As both countries co-operate to advance decarbonisation, we also need to work together to address global excess steel capacity. 'It is in both countries' interests to ensure a sustainable and market-driven global steel sector.' Later on Monday, Mr Albanese will have a lunch with Australian and Chinese business leaders. Both roundtables are key parts of his six-day diplomatic and big business blitz in China. Against a backdrop of an increasingly militaristic regional rivalry with Beijing, Mr Albanese has been keen to reframe the bilateral relationship in friendlier terms, such as tariff-free trade. Originally published as PM pushes Australian ore in China as steelmakers stare down decarbonisation
Perth Now
2 hours ago
- Perth Now
Albo flaunts Aussie iron amid China fears
In a display of classic supply and demand salesmanship, Anthony Albanese will flaunt Australian iron ore at a roundtable with China's biggest steelmakers on Monday. The country's behemoth construction industry has slowed in recent years, fuelling fears a downturn in steel production could smash demand for Australian iron ore and threaten jobs as well as the national bottom-line. Both countries have also committed to cleaning up big polluting industries in line with their broader climate goals. With Australia the world's largest iron ore producer and China Australia's top customer, the Prime Minister will make the case for closer co-operation. 'I'm pleased to be here for an important discussion between Australian iron ore miners and Chinese steelmakers,' Mr Albanese will tell the roundtable, according to speech extracts seen by NewsWire. Prime Minister Anthony Albanese will speak with China's biggest steelmakers at a roundtable on Monday. Joseph Olbrycht-Palmer / NewsWire Credit: News Corp Australia 'Australia and China's iron ore and steel sector partnership has contributed to both countries' economic development for decades. 'Australian miners are reliable and stable suppliers of iron ore, responsible for almost 60 per cent of China's iron ore imports. 'That iron ore goes into Chinese steel production which accounts for over 50 per cent of global supply.' BHP, Hancock, Rio Tinto and Fortescue will all be seated at the roundtable, with Twiggy Forrest among the executives showing up. Nearly 145,000 Australians work in the metal ore mining industry, according to the latest official figures. In 2024, iron ore exports alone were worth north of $150bn. But it is a dirty business in a world scrambling for greener options. 'Steelmaking value chains are also responsible for 7 to 9 per cent of global emissions,' Mr Albanese will say. 'Achieving the goals of the Paris Agreement will require the decarbonising of steel value chains, presenting an opportunity for Australia and China to progress our long-term economic interests.' Mr Albanese will raise the 'challenges' of steel decarbonisation, but aim to reassure both the Australian mining chiefs and the Chinese steel bosses that Australia is willing to front up the cash investments and tweak policies. The Prime Minister will tell industry leaders the challenge of decarbonisation presents an opportunity for the Australia-China relationship. PMO via NewsWire Credit: News Corp Australia 'What we need are enabling policy environments, extensive investments in research to develop new technologies, and collaboration across academia, industry and government,' he will say. 'Australia and China each have major stakes in how the decarbonisation efforts develop. 'As both countries co-operate to advance decarbonisation, we also need to work together to address global excess steel capacity. 'It is in both countries' interests to ensure a sustainable and market-driven global steel sector.' Later on Monday, Mr Albanese will have a lunch with Australian and Chinese business leaders. Both roundtables are key parts of his six-day diplomatic and big business blitz in China. Against a backdrop of an increasingly militaristic regional rivalry with Beijing, Mr Albanese has been keen to reframe the bilateral relationship in friendlier terms, such as tariff-free trade.
West Australian
2 hours ago
- West Australian
Anthony Albanese in China: Big business as mining leaders meet with top players in steel industry
Australia's highest profile business leaders will join the Prime Minister on his second day in Shanghai on Monday as he turns a laser focus on expanding commercial and economic ties with the country's largest trading partner. BHP's Geraldine Slattery, Fortescue's Andrew Forrest and Rio Tinto's Kellie Parker will join Chinese counterparts including Xu Shishuai from the Ansteel Group and Wang Jiming, vice-president of the Baowu Group at a steel decarbonisation roundtable to kick off a business-intensive day. Prime Minister Anthony Albanese, who launched his six-day China tour on Sunday promoting sports and tourism ties, will address both the roundtable and a lunch of some 200 senior Australian and Chinese business leaders from the mining, manufacturing, energy, transport, hospitality and professional services sectors. In the lunchtime speech at the Fairmont Peace Hotel, Mr Albanese will talk up Australia as a 'dependable trade partner backed by a strong, reliable economy' while spruiking the 'impressive growth in two-way business ties,' which saw the exchange of goods and services last year hit $312 billion. His three-city sweep of Shanghai, Beijing and Chengdu this week has been billed as a reinforcement of the ongoing reset of trade and political ties after a series of import bans were slapped on Australian commodities when the Morrison government called for an inquiry into the origins of Covid-19. Monday's menu featuring Australian red meat, rock lobster and red wine, all subject to the recently lifted sanctions regime, is a symbolic nod to improving relations and the removal of more than $20 billion of trade impediments. Mr Albanese will also invoke the memory of former Prime Minister Gough Whitlam who celebrated his 55th birthday at the iconic Shanghai hotel in 1971 while paving the way for Australia's newfound relationship with the People's Republic of China. 'More than half a century on, it is a relationship that continues to evolve and grow, a relationship with a maturity that helps us overcome any challenges and seize the opportunities before us,' Mr Albanese will say. This includes deepening cooperation in decarbonising the two economies and propelling Australia towards its goal of becoming a 'renewable energy superpower.' Steel decarbonisation involves reducing carbon dioxide emissions in steel production that significantly add to global emissions. While China remains the world's largest emitter, it is also viewed as a clean tech powerhouse, funnelling huge resources into renewable energy sources and decarbonising its industrial production. The Government and industry view greater collaboration with China as vital to meeting Australia's own green energy goals. In his speech to the morning roundtable, Mr Albanese will both highlight Australia's 60 per cent contribution to China's iron ore imports for steel production, while acknowledging steelmaking value chains are also responsible for 7 to 9 per cent of global emissions. 'It is in both countries' interests to ensure a sustainable and market-driven global steel sector,' and to 'work together to address global excess steel capacity,' he will say. 'Steel decarbonisation presents a range of challenges. What we need are enabling policy environments, extensive investments in research to develop new technologies and collaboration across academia, industry and government,' Mr Albanese will argue. Geraldine Slattery, BHP President Australia, said this week's high-level business delegation was a testament to how the Australian and Chinese resources sectors boosting the 'ongoing prosperity of both nations.' BHP would seek 'to invest in and foster the technology and process breakthroughs that will drive down emissions in steelmaking facilities not only in China, but around the world,' she said. 'This includes multiple technologies, including low carbon fuel use, carbon capture utilisation and storage, electrolysis demonstrations and direct reduced iron trials like the NeoSmelt electric smelting furnace pilot based in Western Australia.'
