By Lucy Adautin
McDonald’s saw its second straight quarterly decline in sales, facing sluggish consumer demand across international markets like France, the UK, the Middle East, and China.
On Tuesday, the fast-food giant reported a global comparable sales drop of 1.5% year-over-year, surpassing the 0.6% decline anticipated by analysts in a Visible Alpha survey.
This marks McDonald’s first consecutive sales dip since the Covid-19 pandemic in 2020, following a 1% drop in the second quarter. The chain is grappling with the effects of prolonged food inflation, especially on lower-income customers.
Revenue rose 3% to $6.9 billion in the third quarter, slightly above the $6.8 billion forecast. However, net profit slipped 3% to $2.26 billion, falling just short of the estimated $2.3 billion.
Chris Kempczinski, McDonald’s CEO, stated, “We will stay laser-focused on providing an unparalleled experience with simple, everyday value and affordability that our consumers can count on as they continue to be mindful about their spending.”
To entice price-sensitive US customers, McDonald’s extended a $5 meal deal launched over the summer. The promotion appears to be gaining traction, as comparable sales in the US increased 0.3% after a dip in the second quarter.
However, optimism was tempered by an E. coli outbreak linked to onions used in Quarter Pounder burgers in parts of the central US. The outbreak, identified this month, affected the chain’s shares but came after the end of the third quarter.
McDonald’s is resuming Quarter Pounder sales in the region this week, having traced the contamination to a single supplier in Colorado and ceased onion purchases from them.
Global comparable sales include restaurants open for at least 13 months in both the US and abroad. Sales in international markets where McDonald’s operates and franchises dropped 2.1%, with France and the UK leading the declines, the company reported.
Sales in licensed international markets fell 3.5%, with McDonald’s attributing the decline to the war in the Middle East and weaker sales in China, though its Latin American business continued to grow.
In August, McDonald’s introduced collectible cups in over 30 countries, an initiative that Bernstein Research suggested might boost sales. The company reported 42,406 locations globally as of June, with 95% franchised.
