McDonald’s sales slide for first time since 2020
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The news: McDonald’s reported its first global sales decline since 2020, with a 1% fall in comparable sales for the second quarter, missing analyst expectations for modest growth as persistent inflation drove lower-income consumers to seek cheaper food options.
The numbers: Overall revenue increased just 1% and CFO Ian Borden forecast continued pressure on consumer budgets. Despite the disappointing results, McDonald’s stock, which is down 15% this year, rose 3.8% as the decline was less severe than feared.
The context: The burger chain is addressing slowing sales with limited-edition menu items and a new USD5 ($7.66) meal deal launched in June, which has sold above expectations.
Sales in the US fell 0.7%, while international sales dropped 1.1%, impacted by a weak performance in France and ongoing issues in China and the Middle East, where boycotts related to the Israel-Hamas conflict have hurt sales.
MacDonald’s is pursuing an ambitious expansion plan, targeting 50,000 locations worldwide by 2027, up from 42,000 earlier this year. But system-wide sales also took a downturn, suggesting openings aren’t offsetting the weakness in existing branches.
What they said: CEO Chris Kempczinski said there is a lot more deal-thinking from consumers who have become "very discriminating". "Consumer sentiment in most of our major markets remains low," he said.
Borden, the CFO, said the company doesn't “expect that we’re going to see a change in that environment over the next few quarters.” Same-store sales across all geographic segments have continued to be negative starting the third quarter.
