McDonald’s Breakfasts Might Be a Pretty Solid Recession Indicator
The Egg McMuffin could be the canary in the coal mine for the U.S. economy.
At an earnings call on Wednesday, McDonald’s CEO Chris Kempczinski said that the chain has seen visits from lower-income customers fall by double-digits during the second quarter, with the chain’s 50-year-old breakfast menu particularly hard hit. He said the meal “is the easiest daypart for a stressed consumer to either skip breakfast or choose to eat breakfast at home … we as well as the rest of the industry are seeing that the breakfast daypart is absolutely the weakest daypart in the day.”
Daypart, which is fast-food speak for “meal,” is how the big chains divide up their revenue between menus. And what makes Mickey D’s breakfast interesting, suggested CNBC’s Carl Quintanilla, is that it could be considered a “proxy for employment. You’re more likely to visit if you have somewhere to go in the morning.”
Everybody loves an obscure recession indicator. Joe Kennedy famously said it was time to get out of the market when the shoeshine boy started giving stock tips; Michael Burry was worried about strippers and strawberry pickers with investment properties. You could look at how many Americans are living with roommates, or applying to law school. If we can’t trust the Bureau of Labor Statistics to report the numbers anymore, why not turn to the a.m. drive-thru line at McDonald’s?
As Kempczinski observed, the trend is not limited to the Golden Arches. Data from Revenue Management Solutions, an industry analyst, shows that breakfast revenue is down 8–10 percent over this time last year for a broader section of “quick-serve” restaurants. And that comes on top of lackluster data going back to 2022.
As for the correlation with the broader job market, well … that’s not so clear. The idea seems to have its roots in the global financial crisis, when millions of people lost their jobs and fast-food breakfast sales declined. “Typically, if you’re unemployed, you’re not getting up at six and not going through the drive-thru,” Jeffrey Bernstein at Barclays Capital told the Washington Post.
But wait! There’s another fast food indicator:
If it’s downtown offices you’re concerned about, perhaps look to lunch: The Wall Street Journal reports that office drones are bringing their own food to the office and that restaurants sold fewer lunches in 2024 than even in 2020, at the height of the pandemic. Traffic at sad-desk lunch staple Sweetgreen is down 10 percent year over year.
Original article from Slate. Original comment from me: “Maybe a bit of a stretch, but for those of us peek for clues it’s an interesting bit of arcana, maybe.”
Here’s another possible canary. Cummins, a diesel engine manufacturer, released their numbers for last quarter, and although they made money, the numbers were unusual. The big truck engine sales that are the company’s bread and butter lost money. Companies are just not buying new trucks right now. When this happens, typically the parts sales go up. Those old trucks that shipping companies are keeping on the roads longer need to be kept running. That didn’t happen last quarter either. That sounds like shipping is down. The business area that saved the company’s quarter was their sales of engines used in standby electric generators. Evidently all those data centers and AI companies cannot afford to have a power outage. And then there is this, due to uncertainty in the economy the company gave no guidance. The little birdies seem to be squawking not singing a pretty song.
“As of April 2025, all branches of the military except for Space Force were on track to meet or exceed their recruitment goals: the Army was at 116%, the Marine Corps was at 104%, the Navy at 101%, the Air Force at 101%, and Space Force at 97%.”
I can tell them exactly why they are failing at breakfast! They have changed the food they serve in some manner. I used to eat the sausage egg mcmuffin regularly; but within the past year the flavor and quality changed. The sausage use to have just the right tang. This has changed. The first time I had one of the new sandwiches I thought it was just a fluke, a one-time mistake at that McD’s. Then I had another at another McD’s in a different part of the country. And another in England. They have done something to their overall menu. I no longer visit!
I have found that all fast food tastes much worse than it did ten years ago. My favorite at one time was Wendy’s, it got nasty, then Whataburger, it it nasty now. I ate at Culver’s today, the place was clean, up to date a and the burger at Culver’s made Whataburger taste like what a booger.
I wonder how much of that is really because the food itself has deteriorated (sources, preparation, etc.) in quality and how much of that is our more “educated”, or at least experienced, palates? I say that only since my own experiences have given me pause with fast food. I really no longer appreciate most or any of it anymore. When I step back and look at what was available and served years ago, though, it doesn’t seem all that much different.
Lots of price pressure. Trying to keep their products inexpensive, I think they’ve sacrificed quality and tried to find cheaper sources of ingredients. Last time I tried McDonalds is was pretty awful and I don’t think it is my educated palate. : )
I enjoy the Spicy Chicken sandwich and still have that every so often. When I hit the road and travel around the country I look to Popeyes and Panda Express.
An MBA would look at a company like Mickey D’s, with decades of “brand equity”, and want to monitize that equity by cheapening the product, and watch people continue to buy, because of the brand equity. Seems I have observed before, that Mickey D’s has the worst food, but is always the busiest, vs Wendy’s, Arby’s, or Tim’s.
Same with Radio Shack. By 1990, there was no reason to buy any “top 600” merch at RS, like stereos, TVs, computers, because you could get equal or better quality at a big box store, for substantially less. But, it took another 25 years for RS to crash and burn, because the company had so much brand equity that a lot of people continued to patronize them.
The unemployment rate is not 4%, not for any of the young people you are discussing, black, white, or Latino.
The most recent data (July 2025) indicates a 21.7% unemployment rate for young Black individuals aged 16-19, according to FRED Economic Data. For young Black workers aged 16-24, the unemployment rate decreased from 14.5% to 12.3% between February and March 2025, according to the Joint Center for Political and Economic Studies. In comparison, the overall unemployment rate for all young workers (16-24) decreased from 10% to 9.2% during the same period.
What Declining Cardboard Box Sales Tell Us About the US Economy
Analysts and investors will scour Friday’s retail sales report for a readout on how US households are feeling about the economy. Those watching the cardboard box industry say they already have an idea.
US box shipments—that is, volumes of empty packaging materials sold to retailers, which in turn use them to ship orders to warehouses, storefronts and Americans’ doorsteps—fell to the lowest second-quarter reading since 2015, according to data from Fibre Box Association, a trade group. (Corrugated cardboard also goes into other items, such as 3D advertising displays, but since the vast majority is used for packaging, the industry tends to use “box shipments” and “corrugated cardboard shipments” interchangeably.)
Memphis-based International Paper Co., one of the world’s largest pulp and paper companies, reported a 5% drop in daily US box shipments in the quarter from the same period a year ago, while packaging giant Smurfit Westrock Plc, based in Dublin, saw a 4.5%slide in North American corrugated cardboard volumes, the biggest drop across all of the regions it operates.
It goes on to say that many imports arrive in bulk and need to be repackaged (in cardboard) before being shipped to retails or distribution centers. No way to tell if this is a driving factor or “in addition to” other slowdown indicators.