(Reuters) -McDonald’s weak results emerged as the company reported a surprise drop in sales and missed Wall Street estimates. Higher menu prices led to fewer customers, affecting overall revenue. McDonald’s weak results reflect the struggle to attract cash-strapped consumers who prefer dining at home. #McDonaldsWeakResults
Global sales fell 1% in the second quarter, its first decline in 13 quarters, compared with analysts’ average estimate of a 0.53% rise, according to LSEG data.
Persistent inflation has forced lower-income groups to shift to affordable food options at home. In response, chains like McDonald’s and Burger King launched value bundles and limited offers to boost traffic.
Value meal wars have ramped up as rivals Burger King, Wendy’s and Starbucks rolled out meal deals in the recent months.
McDonald’s was set to extend its $5 meal offer into August at most U.S. locations after its launch on June 25.
“McDonald’s faces a significant challenge as low-income consumers cut back on visits. This trend outweighs the usual trade-down McD typically sees during tougher economic times,” said Edward Jones analyst Brian Yarbrough.
CEO Chris Kempczinski said consumers were more discriminating with their spend. Still, McDonald’s kept its 2024 operating margin forecast unchanged in the mid-to-high 40% range.
Its shares, which are down 15% this year, were up marginally in premarket trading as the company also kept its capital expenditure budget of up to $2.7 billion. #McDonaldsWeakResults
More than half of the amount will be used to start new restaurants in the U.S. and international markets.
U.S. comparable sales fell 0.7% in the quarter ended June 30, compared with a 10.3% jump a year ago. Sales in international markets dropped 1.1%, driven by weakness in France.
