McDonald’s reported a bigger-than-expected decline in US sales as financially stretched consumers cut back on dining out, extending a slowdown that has tested the burger chain’s efforts to win back lower-income diners with value meals.
Over the last two years, McDonald’s has rolled out a series of offers such as an under-US$3 (S$3.80) menu and a US$4 breakfast meal as higher living costs force consumers to opt for cheaper alternatives from rivals, convenience stores and home-cooked meals.
Comparable sales in McDonald’s largest market fell 0.2% in the quarter ended Sept 30, missing analysts’ expectations for a 0.1% fall, according to data compiled by LSEG. It was the company’s first such decline after five quarters of growth.
Customer traffic remained under pressure in the third quarter, and visits to McDonald’s restaurants fell 4.6% in the three-month period from a year earlier, according to data firm Placer.ai.
Traffic also remained below year-ago levels in October despite the return of McDonald’s Monopoly promotion and Halloween-themed Boo Buckets.
CEO Chris Kempczinski said in a statement on Nov 4 that the company was “encouraged by improvement as the quarter progressed following our intervention on value.” Chief financial officer Ian Border had told investors at a Sept 23 event that US sales would likely be negative for the quarter, but that September would likely be positive.
Rival Burger King’s parent Restaurant Brands International topped sales expectations last week, helped by discounts and promotions. Yum Brands said on Nov 3 that Tex-Mex chain Taco Bell’s sales have returned to growth following a food safety-related hit.
McDonald’s global comparable sales rose 1.5%, in line with expectations.
Adjusted earnings rose to US$3.57 per share from US$3.22 a year earlier, helped by a roughly 4% decline in operating costs and expenses. REUTERS
