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New York Post
McDonald’s reports first drop in sales since 2020 as customers pull back spending
By Ariel Zilber,
5 hours ago
McDonald’s on Monday reported its first sales drop since the early days of the coronavirus pandemic as the burger giant struggled to draw in cash-strapped customers because of inflated menu prices.
The Chicago-based fast food chain — which rolled out a $5 value meal last month to lure customers — said that its same-store sales in the US fell by 0.7% in the second quarter while revenues were flat, missing analyst estimates of an 0.8% increase.
Last year, US-based same-store sales rose 10.3%. Sales in international markets dropped 1.1%, driven by weakness in France, compared with estimates of a 1.69% growth.
McDonald’s announced its second quarter earnings results, which fell short of Wall Street expectations. Getty Images
The segment had recorded an 11.9% growth a year ago.
McDonald’s reported revenues of $6.5 billion, up 2% year over year but still short of analyst estimates of $6.63 billion.
McDonald’s earned $2.97 per share on an adjusted basis in the second quarter, lower than last year’s $3.17.
Customers worldwide pared back spending on fast food as prices have soared , according to McDonald’s CEO Chris Kempczinski, who told investors on the earnings call on Monday that consumers were “more discriminating with their spend.”
Kempczinski said that the company was focused on “outstanding execution” in its efforts to offer consumers “reliable, everyday value” while “accelerating strategic growth drivers like chicken and loyalty.”
McDonald’s has tried to lure back customers with value deals as inflation has made consumers more picky in how they spend money. Getty Images
He expressed confidence that the company’s strategy was “the right playbook for our business.”
Since Jan. 1, McDonald’s share price has dipped by 15%. On Monday, the stock was trading flat before the opening bell.
Inflation has sent the price of McDonald’s menu items such as the Big Mac skyrocketing. Victoria Will
Persistent inflation has forced lower-income diners to shift to affordable food options at home.
Earlier this summer, McDonald’s rolled out a $5 value meal offering customers a combination of popular menu items such as a burger or chicken sandwich, fries or nuggets and a soft drink.
The popularity of the value deal resulted in an uptick in the number of customers who visited McDonald’s locations in the US.
Some McDonald’s locations sell Egg McMuffins for $7.29 each. Getty Images
The initial plan was to offer the promotion for a month, but the company extended the deal after it noticed that it was helping boost foot traffic to its stores.
But some franchisees expressed concern that the promotion would prompt customers to trade down to the cheaper option when some of them were willing to pony up for a more expensive meal, according to Bloomberg News.
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