McDonald’s posted weak sales in the second quarter as increasingly value-conscious consumers in the U.S., China and paid fewer visits to restaurants.
Sales at locations open at least a year fell 1% worldwide across every company segment in the April-June period, the first decline since the final quarter of 2020 when the pandemic shuttered stores and millions stayed home.
In the U.S., same-store sales fell nearly 1%. McDonald’s saw fewer customers, but it said those who came spent more because of price increases. The company also reported lower store traffic in China, France and the Middle East, where people have been boycotting McDonald’s because of a perception that it supports Israel in the war in Gaza.
McDonald’s warned in April that more of its inflation-weary customers were seeking better value and affordability. The Chicago burger giant introduced a $5 meal deal at U.S. restaurants on June 25, which was late in this financial reporting period.
Quarterly revenue was flat at $6.5 billion and just off the $6.6 billion that Wall Street was expecting, according to analysts polled by FactSet.
The company’s net income fell 12% to $2 billion, or $2.80 per share. Excluding one-time items such as restructuring charges, McDonald’s earned $2.97 per share. That was far from the per-share profit of $3.07 that industry analysts had forecast.
McDonald’s shares fell less than 1% in premarket trading.
McDonald’s, one of the world’s largest fast-food chains, recently reported its first decline in same-store sales since the beginning of the pandemic. The company’s profit also decreased by 12%, marking a significant setback for the iconic brand.
The decline in same-store sales can be attributed to a variety of factors, including the ongoing impact of the COVID-19 pandemic on consumer behavior and dining habits. With restrictions in place and many people still hesitant to dine out, McDonald’s has seen a decrease in foot traffic at its restaurants. Additionally, the rise of delivery services and the increasing popularity of cooking at home have also contributed to the decline in sales.
In response to these challenges, McDonald’s has been focusing on expanding its delivery and drive-thru options to make it easier for customers to access their food. The company has also been rolling out new menu items and promotions to attract customers and drive sales.
Despite the decline in same-store sales, McDonald’s remains optimistic about its future prospects. The company has a strong global presence and a loyal customer base, which will help it weather the current challenges and bounce back from this setback.
In a statement, McDonald’s CEO Chris Kempczinski acknowledged the challenges facing the company but expressed confidence in its ability to adapt and thrive in the current environment. He emphasized the importance of innovation and agility in responding to changing consumer preferences and market conditions.
Overall, while McDonald’s may have experienced a decline in same-store sales and profit, the company remains a powerhouse in the fast-food industry. With its strong brand recognition, global reach, and commitment to innovation, McDonald’s is well-positioned to overcome these challenges and continue to serve customers around the world.
