McDonald's Chicago/IBNS: American multinational fast food chain McDonald’s has reported its first fall in global sales in over three years as inflation-weary consumers seek out cheaper options and cut back on eating out, reports said.
McDonald’s said on Monday (July 29) that its worldwide sales fell 1 percent in the April-June period, which is the first drop since the last quarter of 2020, when the Covid-19 pandemic and government curbs closed businesses and kept millions of people at home.
Outlets in so-called international developmental licensed markets, which are operated by licensees, witnessed a steeper decline, with sales falling 1.3 percent amid weak consumer sentiment in China and boycotts in the Middle East over the fast-food giant’s perceived support for Israel, reports Al Jazeerra.
Chris Kempczinski, the CEO of McDonald’s, said consumers had become “very discriminating” about their spending after previously benefitting from consumers who “traded down” to the fast food chain from more expensive eateries.
“We are seeing trade down, but what we’re seeing is that the loss of the low-income consumers is greater than the trade-down benefit,” Chris Kempczinski said on a conference call with investors.
“You’re seeing with that low-income consumer, in many cases, they’re dropping out of the market, eating at home and finding other ways to economise, ” Kempczinski said, adding that while customers still recognised McDonald’s as the best-value fast-food chain, the “value leadership gap” with its rivals had shrunk.
“We are working to fix that with pace,” he added.
As per executives, a $5 meal deal launched in June had sold ahead of expectations and that the promotion would be extended at most US outlets beyond August.
Kempczinski said that the company is resolved to reignite share growth in all the major markets regardless of the prevailing market conditions.
"This won’t happen overnight, but it will happen,” he said.
Despite the lacklustre results, the shares of McDonald’s rose 4.5 percent on Monday (July 29) morning as investors appeared to be convinced by the fast food chain’s plans to reserve its fortunes, reports Al Jazeera.
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