McDonald's revealed a startling dip in global sales on Monday, the company's first decline in 13 quarters, as budget-conscious customers avoid more expensive menu items like Big Macs.
Lower-class customers are being compelled by persistent inflation to switch to more reasonably priced meals at home. This has led fast food restaurants like Wendy's, Taco Bell, McDonald's, Burger King, and Taco Bell to rely on value meals as a way to draw in customers.
According to CEO Chris Kempczinski, consumers are becoming "very discriminating" and are thinking strategically more often. "Consumer sentiment in most of our major markets remains low," he stated.
In the second quarter, global comparable sales decreased by 1% when analysts' average prediction was for a 0.5% growth. Revenue increased by 1% overall.
In June, McDonald's introduced a $5 lunch bargain to the majority of its US outlets. In an effort to win back clients who have cut back on frequent restaurant outings, it was planning to prolong the deal through August.
"The biggest hit for McDonald's is the low-income consumer has really cut back on visits and that is more than offsetting the typical trade down McD normally sees in tougher economic times," Brian Yarbrough, an analyst with Edward Jones, said.
The Coca-Cola CEO James Quincey stated last week that there had been "some softness in away-from-home channels" in North America, indicating a decline in the number of people dining out. These remarks and McDonald's figures align.
Due to concerns about the crisis in Lebanon getting worse, flights to Beirut Airport are either being cancelled or delayed.
Nevertheless, McDonald's maintained its mid-to-high 40% operating margin prediction for 2024.
The company's shares, down 15% so far this year, were trading at $251.20. More than half of the company's projected $2.7 billion capital expenditure budget was set aside for new restaurants to be opened in both domestic and foreign markets.
Comparable sales in the US decreased 0.7% in the quarter that ended on June 30 after rising 10.3% in the previous year. Sales in foreign markets, which accounted for about half of its sales in 2023, fell 1.1% as a result of France's downturn.
The Middle East war and China's slower-than-expected recovery negatively impacted McDonald's business division, which operates restaurants run by its local partners. Sales fell 1.3% in comparison to a 14% increase in the previous year.
Consumer boycotts related to the Gaza conflict have also hurt businesses like McDonald's and Starbucks, decreasing their sales in Middle Eastern countries.
In the second quarter, McDonald's earned $2.97 per share on an adjusted basis, falling short of $3.07 predicted.
(Source:www.thetelegraph.co.uk)
Lower-class customers are being compelled by persistent inflation to switch to more reasonably priced meals at home. This has led fast food restaurants like Wendy's, Taco Bell, McDonald's, Burger King, and Taco Bell to rely on value meals as a way to draw in customers.
According to CEO Chris Kempczinski, consumers are becoming "very discriminating" and are thinking strategically more often. "Consumer sentiment in most of our major markets remains low," he stated.
In the second quarter, global comparable sales decreased by 1% when analysts' average prediction was for a 0.5% growth. Revenue increased by 1% overall.
In June, McDonald's introduced a $5 lunch bargain to the majority of its US outlets. In an effort to win back clients who have cut back on frequent restaurant outings, it was planning to prolong the deal through August.
"The biggest hit for McDonald's is the low-income consumer has really cut back on visits and that is more than offsetting the typical trade down McD normally sees in tougher economic times," Brian Yarbrough, an analyst with Edward Jones, said.
The Coca-Cola CEO James Quincey stated last week that there had been "some softness in away-from-home channels" in North America, indicating a decline in the number of people dining out. These remarks and McDonald's figures align.
Due to concerns about the crisis in Lebanon getting worse, flights to Beirut Airport are either being cancelled or delayed.
Nevertheless, McDonald's maintained its mid-to-high 40% operating margin prediction for 2024.
The company's shares, down 15% so far this year, were trading at $251.20. More than half of the company's projected $2.7 billion capital expenditure budget was set aside for new restaurants to be opened in both domestic and foreign markets.
Comparable sales in the US decreased 0.7% in the quarter that ended on June 30 after rising 10.3% in the previous year. Sales in foreign markets, which accounted for about half of its sales in 2023, fell 1.1% as a result of France's downturn.
The Middle East war and China's slower-than-expected recovery negatively impacted McDonald's business division, which operates restaurants run by its local partners. Sales fell 1.3% in comparison to a 14% increase in the previous year.
Consumer boycotts related to the Gaza conflict have also hurt businesses like McDonald's and Starbucks, decreasing their sales in Middle Eastern countries.
In the second quarter, McDonald's earned $2.97 per share on an adjusted basis, falling short of $3.07 predicted.
(Source:www.thetelegraph.co.uk)