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McDonald's CEO says the consumer is in a 'fairly decent place' but older people are more confident

Key Points
  • McDonald's CEO Steve Easterbrook tells CNBC's Carl Quintanilla on "Squawk on the Street" that the state of the consumer is still strong.
  • Easterbrook says traffic is tight across the entire restaurant industry, however, as people eat out less.
  • He also says growing employment numbers are a positive sign.
Steve Easterbrook during an interview with CNBC's "Squawk on the Street, " on May 28, 2019.
CNBC

McDonald's CEO Steve Easterbrook said Wednesday the state of the consumer is still strong.

"I think, by and large, the consumer is in a fairly decent place," Easterbrook said on CNBC's "Squawk on the Street. "

U.S. consumer sentiment jumped in May, according to a reading of the consumer confidence index released Tuesday. However, it likely did not fully capture the impact of escalating trade tensions between the U.S. and China.

Easterbrook also said that growing employment numbers are a positive sign.

"What we are seeing [in consumer sentiment] is a slight diffraction in age, though," he told CNBC's Carl Quintanilla. "The consumer confidence in the under-35s is not as high as the consumer confidence in the over-35s, for example. Now that, again, is a fact but a fairly sweeping generalization."

While Easterbrook sounded positive about the consumer, he said traffic is tight across the entire restaurant industry as people eat out less.

"Last quarter, we did grow traffic, and we did grow traffic over the last couple of years, but only modestly and we want to be stronger than that," he said.

The company has had to find how to balance slowing traffic growth with rising labor costs. Easterbrook said the average hourly wage for an employee who works in a company-owned location is around $10.

"I think it will continue to go up," he said. "It's inevitable as the fight for talent continues, and that's one of the reasons why we want to keep growing the business, so you can absorb some of those higher costs."

McDonald's shares hit an all-time high last week. In the last year, the stock is up 22%.

Easterbrook also said the company is considering adding a vegan option to its menu but is working to consider whether this type of product will bring in new customers or appeal to its existing base. The CEO said the interest in vegan food doesn't feel like a fad but may not sustain the current level of buzz.