McDonald’s To Increase Deals, Add Value For Customers To Fight Traffic Slump

By: Alex Trent | Published: May 01, 2024

In a conference call with investors, McDonald’s representatives addressed customer concerns around a feeling of “decreasing value” in the fast-food industry that has led to a decrease in traffic amid high food costs.

In an attempt to reverse disappointing quarterly earnings in the future, McDonald’s plans to focus on offering more deals and increase messaging that emphasizes everyday value.

Customers Pulling Back Dollars

One of the main takeaways from the conference call was that customers across different demographics are increasingly looking for value amid food price increases.

Vehicles parked at a parking lot in front of a McCafe

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“The consumer is certainly being very discriminating in how they spend their dollar,” said McDonald’s President and CEO Chris Kempczinski in the conference call. “It may be more pronounced with lower-income consumers, but its important to recognize that all income cohorts are seeking value.”


Customer Spending Patterns

McDonald’s has noticed that customer spending habits are greatly influenced by inflation concerns that have seen all their normal needs get more expensive over the past few years.

A McDonald's meal presented on a tray, including a cheeseburger in a box, a small fries in a red carton, and a soda in a cup with a McDonald's logo

Source: Wikimedia Commons

Kempczinski said “The inflation that has occurred over the last couple of years in the U.S., I think, has certainly created that environment.”

Flat Traffic

According to the company conference call, traffic in Q1 for McDonald’s was disappointing in almost all major markets.

The iconic McDonald's sign with the golden arches illuminated against a twilight sky showing hues of blue and purple

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“It is worth noting the in Q1 industry traffic was flat to declining in the U.S., Australia, Canada, Germany, Japan, and the UK. And across almost all major markets industry traffic is slowing,” Kemczinski said.

Disappointing Earnings

While McDonald’s reported that sales in its open stores rose by 1.9% across the company between January and March, this number was lower than what Wallstreet investors were expecting.

A nighttime view of a McDonald's restaurant, illuminated with warm lighting, featuring the iconic golden arches sign and festive lights visible through the windows


A poll of analysts by FactSet found had forecasted a 2.1% increase, which is still lower than what McDonald’s investors are used to.

Post-Pandemic Growth

Previously, McDonald’s had warned investors that the fast-growth restaurants saw after the pandemic restrictions lifted would start to slow. 

A man wearing a black toque, a black mask, and a black jacket stands against a field of dry grass

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Despite the warning, these Q1 numbers disappointed investors because McDonald’s typically posts same-store sales growth of between 3% and 4% every year.


Everyday Value

Kempczinkski emphasized the importance of providing value to customers to win out on the perception value game over their competitors.

A McDonald's meal consisting of a Big Mac box, a crumpled bag of a Bacon McDouble, a red fry box with French fries spilling out, on a wooden surface

Source: Brett Jordan/Unsplash

“In the context of a difficult macro environment for the industry, we know our customers are looking for reliable everyday value now more than ever,” said Kempczinski. “There’s a lot of great value out there, but everyone else has a value message too.”


Bringing Traffic Back

CEO Kempczinski asserted that the way to get traffic coming back to stores is to stay on top of the market’s ability to quickly find opportunity and value.

The parking lot of a McDonald's Restaurant in California.

Source: TaurusEmerald/Wikimedia

“I was impressed by the market’s ability to quickly identify an opportunity in their everyday value offerings to implement a new entry-level value platform, which is driving traffic back into our restaurants,” Kempczinski said.


Impact of Boycotts

In addition to declining traffic, recent boycotts against the company were brought up as a source of stress for McDonald’s in some markets.

A large McDonald's sign featuring the iconic golden arches stands tall against the sky, with a modern building facade in the background, also adorned with a smaller McDonald's logo

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“I think if you look at the impact of some of the boycott in a few of our markets, I wouldn’t say things are getting any worse there…So maybe marginally better in some markets but as I referenced on an earlier call, we’re not expecting to see any meaningful improvement in the impacts on that until the war is over, and we continue to have that outlook on what the Middle East conflict is going to do to our trends,” said Kempczinski.


Info on CosMc’s

McDonald’s is currently testing a beverage restaurant brand in Illinois and Texas called CosMc’s. When asked about the brand in the call, Kempszinski didn’t have much to report on performance results.

A CosMc's restaurant in Illinois with a purple building and a busy drive-through

Source: BanjoZebra/Wikimedia

 “As I’ve referenced previously, we have — we plan on opening 10 restaurants, and it will be a function of unit volumes. It will be a function of margins, and it will be a function of what’s the capital that we need to spend to get these things built. All of that will drive our overall assessment of what the ROIC potential is,” Kempczinski said.


Digital Offers

Kempczinski highlighted the value the company is currently providing to customers through both meal bundles and digital offers.

A McDonald's Big Mac meal, including a box containing the burger, a side of fries, and a dipping sauce, sits on a wooden table with a red chair, alongside various personal items

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He mentioned that while getting on the call he opened the app and saw a Big Mac offering for $0.29 and asserted that 90% of the U.S. offers for meal bundles cost $4 or less.


50 Different Ways

McDonald’s is taking customer attitudes around value to heart to create menu pricing that is unique to different local areas.

Inside a McDonald's restaurant, employees wearing uniforms and face masks are working behind the service counter

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“And one of the things that’s going on in the U.S. right now is the value message that I was talking about, we’re doing it in 50 different ways with local value,” said Kemczinski.