McDonald’s CEO admits the burger giant’s sales are hurting as menu price hikes drive away key customers, and plans for the chain to focus on “affordability” this year. suggested that.
The Chicago-based fast-food giant has been going wild lately with its nearly $18 Big Mac combo menu, but global same-store sales rose just 3.4% in the latest quarter, compared to Wall’s 4.7% increase. It was announced that it was not possible. The street was expected.
The lackluster quarter – which the company also blamed on the Middle East conflict plaguing its overseas franchisees – sent McDonald’s shares on the New York Stock Exchange down nearly 4% to $285.97 as of Monday’s close. It became.
“Going into 2024, you’re probably going to see a lot more focus on what I would call affordability,” McDonald’s CEO Chris Kempczinski said during an earnings call with analysts on Monday. I think it will be.”
Low-income customers, especially those with annual incomes of less than $45,000, have largely stopped ordering from McDonald’s. Kempczinski acknowledged that people are eating more at home as food prices fall due to inflation.
“Eating at home has become more affordable,” Kempczinski said. “The battleground is certainly low-income consumers.”
Despite the uproar, McDonald’s customers should brace for further price increases this year — albeit at a slower pace of 2% to 3% compared to 10% last year, said restaurant analyst Mark Kalinowski. told the Post. McDonald’s attempts at “affordability” will likely take the form of targeted deals offered on its mobile app, he predicts.
“App discounts will be a big part of their arsenal,” Kalinowski said.
Last week, a McDonald’s branch in Connecticut came under fire for its “exorbitant pricing” after customers were charged $7.29 for an Egg McMuffin and nearly $5.69 for a side of hash browns.
Over the summer, a franchisee near Darien, Conn., was cited for charging $17.59 for a Big Mac combo meal. The restaurant also sold a $19 cheese and bacon quarter pounder that comes with fries and a soda, according to the reviewer.
McDonald’s said it expects U.S. growth to slow to 3% to 4%, compared with 4.3% in the most recent quarter. Most of that growth is due to “menu price increases,” the company said.
Meanwhile, all of the company’s operating regions around the world recorded positive growth, with the exception of the Middle East, where McDonald’s franchisees have had a “significant business impact,” Kempczinski said on LinkedIn in January. stated through a post.
Berger also denounced “misinformation” about McDonald’s position on the Israel-Hamas war, saying the boycott of its stores was due to a false narrative that it had taken a stand against the war, including at Starbucks. of companies.
In the days after the Oct. 7 Hamas attack, a mob of Lebanese protesters attacked a local after an Israeli McDonald’s franchise announced it would provide free meals to Israeli soldiers participating in military operations. With the looting of McDonald’s restaurants, the “local owner-operator” distinction was lost. Operation in Gaza.
According to a report in the Wall Street Journal, about 10% of McDonald’s 18,000 overseas restaurants are located in the Middle East, accounting for 12% of overseas sales.
“We don’t expect a significant improvement until the Middle East issue is resolved,” Ian Bowden, the company’s chief financial officer, said on a conference call with analysts.
Experts also warn that fast food prices could rise further as minimum wage hikes are implemented across the country. California’s $20-an-hour minimum wage for fast food workers goes into effect in April.
McDonald’s and Chipotle both announced they will increase menu prices at their Golden State locations starting this year.
