McDonald's Squeezed by Inflation and Rising Costs

McDonald's (NYSE: MCD) is struggling to keep customers due to inflation and rising costs. CEO Chris Kempczinski warned that industry traffic growth will be flat as long as inflation remains elevated, at around 3.2% year-over-year.

The biggest burden on consumers' pocketbooks is diesel prices, which have surged over 60% in the last year to a record $6.51 per gallon. This has forced truckers to pass on costs to their customers, who often cannot afford higher expenses.

A drought in the central US has also cut grain production, raising beef prices and deepening the squeeze on McDonald's low-income customers. The company may reinvent its menu to become more appealing to consumers, but investors do not believe this will keep customers walking through its doors.