McDonald’s Suffers Sales Fall
New data from the fast food establishment has revealed that McDonald’s restaurants open for at least one year saw a sales fall of about 1% during this year’s April-June period, when compared to 2023 during the same time.
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This is the first decline experienced since the COVID-19 pandemic. These poor results already have the company worried.
McDonald’s Deals Aren’t Working
This data also suggests that McDonald’s $5 meal deal — a promotion that was created to bring consumers back to locations around the U.S. — hasn’t worked so far.
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Many Americans have struggled to afford to eat out at fast food establishments, as menu prices have skyrocketed in the past few years, thanks to high inflation.
Global Deals
McDonald’s hasn’t just worked to bring Americans back into its restaurants. It has also offered many deals globally, in different countries, in an effort to bring in more customer traffic.
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For example, the fast food company is currently offering a campaign in the U.K. that allows customers to select three items for only £3.
Rethinking Menu Prices
However, it has appeared that these global deals and promotions haven’t helped, as sales have fallen.
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This has caused the CEO of McDonald’s, Chris Kempczinski, to explain that the company now has to have a “comprehensive rethink” of its menu prices.
Leaning on Discounts and Promotions
Kempczinski explained to investors that McDonald’s would begin to lean on discounts and promotions even more in the near future, all in an effort to stop this sales decline.
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Promotions, such as the $5 meal deal in the United States, will likely continue, as reporting has already suggested that this deal will be extended for a few more months.
Working on Value
Kempczinski further stated that the company would have to work on its value efforts to bring sales up.
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“We know how to do this. We wrote the playbook on value and we are working with our franchisees to make the necessary adjustments,” he explained.
Customers Feel That Fast Food Is Too Expensive
Sales have likely fallen at McDonald’s because customers around the United States now feel that fast food establishments are much too expensive for them.
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Many consumers even feel that fast food is now a luxury that they cannot afford, as menu prices have skyrocketed in only the last few years.
McDonald’s Points to Inflation
McDonald’s has countered these complaints with a formal response explaining that their menu prices have only risen 21% since 2019, which is in line with the pace of inflation in the U.S.
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However, some analysts have pointed out that McDonald’s has increased the prices of some of its key items much faster than its peers have.
Savvy Consumers Won’t Pay More for McDonald’s
According to Bank of America analyst Sara Senatore, consumers are savvy. They know when they’re paying too much for a fast food meal.
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“Consumers are savvy, aware of that,” Senatore said. “The $5 meal that they have launched may be starting to change perceptions, but we are not seeing a trend change yet in terms of transactions and that’s what they’re going to need to see.”
A Change in Consumers
Kempczinski also admitted that lower-income consumers — customers that McDonald’s relies on — have been hurting because of high inflation. As a result, they’ve been more wary about where and when they spend their money. They haven’t been going to McDonald’s.
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Meanwhile, higher-income consumers haven’t traded down to eat at McDonald’s, which has led to this decline in sales.
Other McDonald’s Issues
McDonald’s has faced a slew of issues this year that could also be to blame for this global drop in sales.
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Many consumers in various countries, such as France and nations in the Middle East, have boycotted the chain because of the Israel-Gaza war. Analysts have pointed this out, explaining that this also likely has led to a drop in sales.