Nov 9 (The Guardian) – McDonald’s has posted another bigger than expected drop in sales as demand continues to slow, despite attempts to lure customers back with value meals.
Spending by consumers has been sluggish or falling across the US, Europe and China in recent months, with people weary from years of high food inflation looking for cheaper meal fixes or staying at home.
McDonald’s global sales at outlets open at least a year fell by 1.5% between July and September, the biggest decline in four years, more than twice the size forecast by analysts. It followed a 1% drop in the April to June period – the first two consecutive quarters of contraction since the height of the Covid crisis in 2020.
While the US returned to growth in the latest results with a 0.3% rise in sales, international markets were down by 2.1%, driven by France and the UK. Net profits fell by 3% to $2.3bn.
Weaker consumer spending in China, and the continued impact of the war in the Middle East, led to a 3.5% drop in sales in its licensed business, in which restaurants are run by local partners.
McDonald’s has faced boycotts and protests over its perceived pro-Israeli stance and alleged financial ties to the country. In April, the company bought its 30-year-old Israel franchise from Alonyal, taking back ownership of 225 restaurants employing more than 5,000 people. Alonyal had announced shortly after the 7 October attack by the Palestinian Islamist group Hamas that it would be donating free meals to the Israeli military.
The US fast food chain has tried to woo customers with £5 meal deals in the UK and $5 limited-time promotions in the US. Rivals including Wendy’s, Burger King and Taco Bell have also resorted to meal bundles and limited-time offers to get customers through the door, especially those from lower-income households.
McDonald’s chief executive, Chris Kempczinski, said the company was “laser-focused” on everyday value and affordability as customers “continue to be mindful about their spending”. It has extended the $5 meal deal in the US, launched in June, until December in most locations.
He apologised for the recent E coli outbreak linked to Quarter Pounders that has infected 75 people and killed at least one person. He said the situation appeared to be contained and he was “confident in the safety of eating at McDonald’s”.
Last week, McDonald’s temporarily paused serving Quarter Pounders in a fifth of its 14,000 US restaurants. Slivered onions used in the hamburgers are likely to be the source of the infection, traced to a single vegetable supplier in Colorado. McDonald’s stopped buying onions from the supplier. The company’s shares lost nearly 7% last week and fell 2% before markets opened on Tuesday, before recovering to trade nearly 1% higher.
The company’s chief financial officer, Ian Borden, said: “The most significant events are behind us and the work to do right now is focused on restoring consumer confidence, getting our US business back to that strong momentum.”
