McDonald’s Sees First Global Sales Drop in Over 3 Years

McDonald’s has recorded its first dip in global sales in almost three years, as inflation-weary consumers look for cheaper alternatives and reduce their eating out.

McDonald’s global sales dipped 1% in April-June, the fast food company reported on Monday, the first drop since the fourth quarter of 2020, when the COVID-19 epidemic and government restrictions stopped businesses and kept millions of people at home.

Outlets in so-called international developmental licensed markets, which are run by licensees, experienced a larger loss, with sales falling 1.3 percent due to low consumer mood in China and boycotts in the Middle East over the fast-food chain’s perceived support for Israel.

McDonald’s CEO Chris Kempczinski stated that consumers had become “very discriminating” in their spending after the company had previously benefited from customers who “traded down” from more costly restaurants to the fast food chain.

“We are seeing trade down, but what we’re seeing is that the loss of low-income consumers is greater than the trade-down benefit,” Kempczinski said on an investor conference call.

“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 stated that, while customers still regarded McDonald’s as the best-value fast-food chain, the “value leadership gap” with its competitors had narrowed.

“We are working to fix that with pace,” stated the minister.

Executives stated that a $5 meal bargain launched in June sold ahead of expectations, and that the promotion would be continued at most US locations beyond August.

“We are determined to rekindle share growth in all of our major markets, regardless of the current market conditions. “This will not happen overnight, but it will,” Kempczinski stated.

Despite the disappointing results, McDonald’s shares surged 4.5 percent on Monday morning, as investors appeared persuaded by the fast food chain’s intentions to preserve its riches.