There are probably few businesses that have their ears closer to the ground than McDonald’s, and they have an interesting insight about the current economy.
In a recent interview, McDonald’s CEO Chris Kempczinski provided a candid and granular look at the U.S. consumer, effectively describing what he calls a “two-tier economy.” His perspective is particularly noteworthy because McDonald’s vast scale, with millions of daily transactions, gives it a real-time pulse on the spending habits of a wide demographic, especially those in the middle and lower-income brackets. What their data shows is a growing divergence between the financial health of the wealthy and the struggles of everyone else.
Kempczinski begins by explaining the split he sees in the market. While headlines might debate the overall state of the economy, the view from the front lines of retail tells a more nuanced story.
“Part of what we also saw was that, particularly with middle and lower-income consumers, they’re feeling under a lot of pressure right now. There’s a lot of commentary about the state of the economy and how it’s doing, and what we see is that it’s really a two-tier economy.”
He first details the situation for high earners, who are not only weathering economic uncertainty but thriving. Their confidence is buoyed by a strong stock market and appreciating assets.
“If you’re in the upper-income bracket, earning over a hundred thousand dollars, things are good. Stock markets are near all-time highs, and you’re feeling quite confident. You’re seeing international travel; all those barometers of upper-income consumers are doing quite well.”
However, Kempczinski paints a starkly different picture for the majority of consumers, revealing specific and concerning behavioral changes driven by financial strain. The data shows a clear pullback in spending on even small, affordable luxuries.
“What we see with middle and lower-income consumers is a different story. Those consumers are under a lot of pressure. In our industry, traffic for lower-income consumers is down double digits, and it’s because people are either choosing to skip a meal—we’re seeing people actually skipping breakfast—or they’re choosing to just eat at home.”
This reality, he explains, forces a direct business response. When a significant portion of your customer base is struggling, a business can’t afford to ignore it.
“And so for our business, which has a significant group of consumers in that middle and lower-income bracket, we needed to step in with something.”
The Broader Implications
Kempczinski’s ground-level observation is a perfect illustration of what economists have termed a K-shaped recovery. In this scenario, different segments of the economy recover at vastly different rates after a downturn. The upward arm of the ‘K’ represents the wealthy, whose fortunes are tied to financial markets and assets that have performed exceptionally well. The downward arm represents the rest of the population, whose finances are more dependent on wages that have struggled to keep pace with persistent inflation in essentials like groceries, fuel, and housing.
This trend is visible far beyond McDonald’s. We see luxury brands like LVMH and high-end car manufacturers reporting record profits, while discount retailers like Dollar General and Walmart are simultaneously seeing a surge in traffic from middle-income consumers “trading down” to save money. For the tech industry, this bifurcation is critical. It signals that a one-size-fits-all product strategy is becoming less viable. Companies may need to develop both premium, feature-rich offerings for the top tier and hyper-efficient, value-focused solutions for the strained majority. As Kempczinski’s insight reveals, the most successful businesses will be those that understand which part of the ‘K’ their customers are on and adapt accordingly.