McDonald’s US same-store sales fell for the first time in four years. Photo courtesy of McDonald’s
McDonald’s Inc. said Monday that same-store sales fell 0.7% in the second quarter as consumers, frustrated by price increases, reduced visits to the fast-food chain.
Global performance wasn’t much better, with economic and geopolitical challenges contributing to sales declines in major markets around the world. System-wide same-store sales fell 1% in the quarter ended June 30.
This was the Chicago-based fast-food giant’s worst sales performance since the second quarter of 2020, when the global pandemic shut down restaurants around the world. It also marked the first time in 16 quarters that same-store sales in the U.S. have declined.
A look at the two-year trend offers little solace: The chain’s U.S. same-store sales fell 510 basis points in the quarter on a two-year “stacked” basis.
Revenue for the quarter was flat at $6.5 billion. Net income fell 12% to just over $2 billion, or $2.80 a share. Both figures fell short of Wall Street expectations for the quarter, according to the website Earnings Whispers.
McDonald’s CEO Chris Kempczinski said in a statement that he believed the company’s strategy was “the right one for our business” and that “consumers are becoming more cautious with their spending.”
The results confirmed a warning the company began making in earnest in February, when Kempczinski noted that slowing food price inflation was making its prices cheaper than McDonald’s and other fast-food chains.
Executives doubled down on those warnings in May. “Four months into the year, it’s clear that 2024 will not be a typical year for the entire industry,” CFO Ian Bowden told analysts at the time. “The macro headwinds have been greater than we had anticipated going into the year and, frankly, they continue to be present as the second quarter begins in many of our large international markets and in the U.S.”
McDonald’s grew sales through digital channels, especially loyalty customers. In the 50 markets around the world where MyMcDonald’s Rewards is available, sales to loyalty members totaled $7 billion during the quarter. The chain made $26 billion through loyalty members in the past 12 months.
Deliveries also increased during this period.
McDonald’s sales slump was also evident around the world. In its International Direct Markets division, which includes its most mature overseas markets, same-store sales fell 1.1%. The company said same-store sales were negative in “a number of markets,” led by France.
In its international development and licensing markets, which include some of the chain’s growth markets, same-store sales fell 1.3%, a decline the company blamed on the impact of the Middle East wars and weaker same-store sales in China.
McDonald’s U.S. same-store sales figures don’t include much of the chain’s value offer, the $5 Meal Deal, which launched in late June.
But the results could spur the chain’s value menu efforts later this year. More than 90% of the chain’s U.S. markets voted in favor of extending the meal bundles through next month. The company is also aggressively testing options beyond its value menu.
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Restaurant Business Editor-in-Chief Jonathan Mays is a longtime industry journalist who writes about restaurant finances, mergers and acquisitions, and the economics of the industry, with a particular focus on quick-service restaurants.
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