McDonald’s announced a surprising drop in sales worldwide for the first time in over three years. This drop happened because people are avoiding higher-priced items like Big Macs due to inflation.
Many people with lower incomes are choosing cheaper food at home, which has led fast food places like McDonald’s, Burger King, Wendy’s, and Taco Bell to offer cheaper meal deals to attract customers.
McDonald’s CEO Chris Kempczinski noted that consumers are being more careful with their spending and that overall feelings about the economy are low.
Sales were down 1% globally in the second quarter, while experts had expected a slight increase. However, total revenue went up by 1%.
In June, McDonald’s started a $5 meal deal in the U.S. and planned to continue it into August to try and bring back customers who have been eating out less.
Analyst Brian Yarbrough said McDonald’s is seeing fewer visits from low-income customers, which is having a bigger impact than usual.
This drop in McDonald’s sales is similar to comments made by Coca-Cola, which also noted fewer people eating out in North America.
Despite the drop in sales, McDonald’s is keeping its forecast for its profit margins in 2024 and has maintained its planned budget for building new restaurants.
Shares of McDonald’s are down 15% this year and were trading at $251.20. The company plans to spend up to $2.7 billion, with over half going to new restaurants in the U.S. and other countries.
In the U.S., sales fell by 0.7% in the quarter ending June 30, compared to a 10.3% increase the previous year. International sales, which made up nearly half of the company’s revenue in 2023, dropped by 1.1%, especially in France.
Sales also declined in China and were affected by the Middle East conflict. Additionally, boycotts related to the Gaza war have hurt sales in the Middle East.
McDonald’s earned $2.97 per share in the second quarter, missing the expected $3.07.
