McDonald’s earnings, revenue miss estimates as consumer pullback worsens


McDonald’s on Monday reported quarterly earnings and revenue that missed analysts’ expectations as same-store sales declined across every division.

“Industry traffic has declined in major markets like the U.S., Australia, Canada, and Germany. In several markets, we also continue to be negatively impacted by the war in the Middle East,” McDonald’s CEO Chris Kempczinski said on the company’s earnings call. “These external pressures certainly weighed on our performance for the quarter, with declines in comparable sales globally and across each of our segments, but there were also factors within our control that contributed to our underperformance, most notably, our value execution.”

Company executives acknowledged that diners considered their prices too high and said that they are taking a “forensic approach” to evaluating value offerings and working with franchisees to make the necessary adjustments.

Here’s what the company reported compared with what Wall Street was expecting, based on a survey of analysts by LSEG:

  • Earnings per share: $2.97 adjusted vs. $3.07 expected
  • Revenue: $6.49 billion vs. $6.61 billion expected

The fast-food giant reported second-quarter net income of $2.02 billion, or $2.80 per share, down from $2.31 billion, or $3.15 per share, a year earlier. Excluding charges related to the future sale of its South Korean business and other items, McDonald’s earned $2.97 a share.

Its quarterly revenue of $6.49 billion was about flat compared with the year-ago period.

McDonald’s same-store sales shrank 1%, missing StreetAccount estimates for growth of 0.4%. It’s the first time companywide same-store sales have fallen since the fourth quarter of 2020.

In the U.S., McDonald’s same-store sales decreased 0.7% for the quarter. A year ago, the chain reported U.S. same-store sales growth of 10.3%, thanks to its popular Grimace Birthday Meal.

But in the 12 months since, more consumers have cut back their restaurant spending, particularly at fast-food chains, which they no longer see as a good deal. McDonald’s said foot traffic to its U.S. restaurants fell during the quarter.

“At the end of the day, we expect customers will continue to feel the pinch of the economy and a higher cost of living for at least the next several quarters in this very competitive landscape,” McDonald’s U.S. President Joe Erlinger said

Executives previously warned that the competition for customers had become more fierce as the consumer environment weakened. McDonald’s is leaning into discounts to bring back diners. The chain launched a $5 meal deal in late June, five days before the end of the quarter.

A week ago, the company told its U.S. system that it plans to extend the value meal past the planned four-week runtime and said that it’s bringing back customers. Executives on the company’s earnings call said that the deal sold better than expected, with rates highest among lower income diners. Erlinger also said the deal improved brand perceptions around affordability and began to increase guest count growth, but has yet to translate into higher sales.

McDonald’s is trying to lure in diners outside of the U.S., too. Its international operated markets division, which includes large segments like France and Germany, saw its same-store sales slide 1.1% in the quarter.

Company executives said they have seen a slowdown in France due to pricing competition and consumer boycotts over the war in Gaza.

The company’s international developmental licensed markets unit, which includes China and Japan, reported same-store sales declines of 1.3%. McDonald’s continues to be affected in several markets from the fallout of the boycotts of the brand over the Gaza conflict, and sales in China continue to struggle.

— CNBC’s Robert Hum contributed to this report.



Source link

Muhammad Amin
Muhammad Aminhttp://buzznews.ahkutech.com
I am a teacher and a professional blogger with 3 years of experience. In addition to my teaching career, I am also a content writer, dedicated to creating engaging and informative content across various platforms.

Related Articles

LEAVE A REPLY

Please enter your comment!
Please enter your name here

Stay Connected

0FansLike
0FollowersFollow
0SubscribersSubscribe

Latest Articles

Enable Notifications OK No thanks