Traffic in fast food outlets McDonald's in the first quarter, was stable or decreased in countries such as the US, Australia, Canada, Japan, the UK and Germany.
"Consumers are showing increased selectivity in how they spend their money," said the President and CEO of McDonald's, Chris Kempczinski, speaking on a conference call with investors on Tuesday. "This trend may be more pronounced among lower-income consumers, but it's vital to recognize that people from all economic levels are looking for quality value in their purchases."
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McDonald's has revealed that its sales in stores that have been open for at least a year have recorded a global Increase 1.9% during the first quarter, from January to March. This figure was slightly below Wall Street expectations, which had forecast a 2.1% increase, according to analyses from FactSet.
McDonald's had warned investors that the dazzling growth that had emerged after the pandemic was unlikely to continue this year. Despite predictions, the company managed to record growth in same-store sales in the first quarter, although this was below the usual 3% to 4% growth rate that McDonald's expects in a typical year.
In the United States, sales per store recorded an increase of 2.5% in the first quarter, mainly due to the price increases implemented from the previous year.
During the conference, Kempczinski examined the Application of McDonald's and discovered many attractive offers, among them an offer for a Big Mac for only 29 cents after buying another one. In addition, Kempczinski reported that 90% of McDonald's restaurants in the US offer meal plans priced at $4 or less.
Kempczinski stressed McDonald's need for a unified national marketing and value message to strengthen its position. He said that in some areas, the company lags behind competitors in terms of customers' perception of value and affordability. For example, Wendy's offers free fries with the purchase of a medium burger.
The situation does not appear to be much more promising in international markets for McDonald's, with Sales of its global sales in some stores to decrease by 0,2%. This was due to boycotts by customers in the Middle East and Muslim-majority markets such as Indonesia and Malaysia, due to the company's support for Israel. This was the first time since 2020 that sales in this segment showed a decline.
The boycott began in October, after the McDonald's beneficiary in Israel announced that free meals were being offered to Israeli soldiers active in the Gaza war. McDonald's tried to mitigate the negative impact of this action. In early April, it announced the purchase of Alyonal Limited, the beneficiary, taking control of 225 McDonald's restaurants in the region. The financial terms of the acquisition were not disclosed.
Kempczinski said the impact of the boycotts does not appear to be intensifying, while some of the markets continue to experience an increase in demand for deliveries. However, McDonald's anticipates that the boycotts will last for some time in the near future.
"We do not expect any significant improvement until the war is over," he said.
McDonald's has reported an impressive 5% increase in revenue, reaching $6.17 billion during the first quarter, January to March.
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The clean earnings increased 7%, reaching $1.93 billion. After adjustments for restructuring charges, earnings per share came in at $2.70, slightly below analyst expectations of $2.72.
McDonald's shares held steady during Tuesday morning trading.
Source: apnews.com
