McDonald’s announced on Thursday (May 1st) in its first-quarter financial report showed that the same-store sales of this fast-food giant in the United States have declined for the second consecutive quarter, marking the largest domestic drop since the outbreak of the COVID-19 pandemic.
The issue of declining customer flow at McDonald’s is particularly severe in the United States, with same-store sales falling by 3.6% in the first quarter. This is the largest decline McDonald’s has seen in the United States since 2020, when stores, restaurants, and other public places across the nation closed due to the pandemic.
Chris Kempczinski, Chairman and CEO of McDonald’s, stated that lower and middle-income consumers reduced their fast-food consumption during the period from January to March due to concerns about inflation and economic prospects.
He mentioned that within the entire fast-food industry, customer traffic for consumers with an annual income of $45,000 and below decreased by double digits, while customer traffic for middle-income consumers also dropped by nearly double digits, with only consumers earning $100,000 or more maintaining stable traffic.
During a conference call with investors on Thursday, Kempczinski said, “We believe that McDonald’s will be able to navigate through these challenging times better than most companies. However, we are not immune to the impact of industry fluctuations and the pressures faced by consumers.”
Global same-store sales at McDonald’s in the first quarter declined by 1%, as robust customer traffic growth in Japan, China, and the Middle East failed to offset weakness in markets like the UK. The company stated that excluding the extra day from the leap year in 2024, global same-store sales for the first quarter would have remained flat. Analysts surveyed by financial data and software company FactSet had previously expected McDonald’s growth to be close to 2%.
The Chicago-based fast-food chain introduced the McValue Menu in the United States, allowing customers to purchase an additional item for $1 when buying full-price items. The company also announced on Thursday that its $5 combo meal deal will continue until the end of this year. The offer was introduced last June and has been extended multiple times.
Kempczinski mentioned that while the $5 combo meal has received positive feedback from consumers, the McValue Menu has not brought the expected additional sales to the company, so McDonald’s may make adjustments to it.
Kempczinski also stated that McDonald’s had anticipated the first quarter to be the softest quarter of the year. The situation has already begun to improve.
On Thursday morning, McDonald’s stock price fell by 1%.
According to FactSet data, McDonald’s first-quarter revenue decreased by 3% to $5.95 billion, lower than the analysts’ forecast of $6.09 billion.