McDonald's executives admit diners think prices are too high, say they're working to create value

McDonald's executives acknowledged Monday that diners consider the company's prices too high as lower-income consumers balk after years of high inflation.

During the company's second-quarter earnings call Monday, executives said they are taking a "forensic approach" to evaluating prices and trying to create value. The company posted worse-than expected second-quarter earnings as same-store sales declined across every division.

"We recognize that in several large markets, including the U.S., we have an opportunity to improve our value execution. Consumers still recognize us as the value leader versus our key competitors but it's clear that our value leadership gap has recently shrunk. We are working to fix that with pace," McDonald's CEO Chris Kempczinski said on the company's earnings call.

Kempczinski said price increases have made consumers reconsider buying habits.

As consumers pull back spending amid increasing prices, fast-food chains have had a difficult time drawing in lower-income diners. More than 60% of respondents to a recent LendingTree survey said they have cut back their fast-food spending because it is too expensive.

McDonald's executives on the earnings call said lower-income diners have not been moving from the chain to other fast-food restaurants, but instead have been eating out less frequently across most of the company's markets globally. The company saw consumers pull back in not just the U.S. but globally, particularly families in European markets.

"At the end of the day, we expect customers will continue to feel the pinch of the economy and a higher cost of living for at least the next several quarters in this very competitive landscape," McDonald's U.S. President Joe Erlinger said. "So we believe it is