McDonald’s Faces First Global Sales Decline Since 2020
McDonald’s has experienced its first global sales drop since late 2020, with like-for-like sales falling by 1% in the second quarter ending June 30, 2024. This downturn marks a significant shift for the fast-food giant, which had seen consistent growth in recent years.
Chief Executive Chris Kempczinski remains optimistic, stating, “We are confident that Accelerating the Arches is the right playbook for our business. As consumers are more discriminating with their spend, we are focused on delivering reliable, everyday value and accelerating strategic growth drivers like chicken and loyalty.”
Despite the decline, McDonald’s reported strong systemwide sales to loyalty members, totaling over $26 billion for the trailing 12-month period and approximately $7 billion for the quarter. However, like-for-like sales in the US dropped by 0.7%, primarily due to a decrease in comparable guest counts, though this was partially offset by increased average transaction values from strategic menu price hikes.
The “international operated” segment, including the UK, saw a 1.1% decrease in like-for-like sales, with France being a significant contributor to the decline. The “international developmental” licensed segment experienced a 1.3% drop, largely due to ongoing conflicts in the Middle East and negative sales in China, which outweighed positive performances in Latin America and Japan.
Total revenue for the quarter decreased slightly, from $6.498 billion the previous year to $6.49 billion. In May, Joe Erlinger, President of McDonald’s USA, highlighted in an open letter that the average cost of a Big Mac meal had risen by 27% since 2019, now priced at $9.29 in the US. Despite this, he noted that many menu items’ costs had been outpaced by inflation.
To attract customers, McDonald’s and its competitors are now offering discounts. A recent $5 deal in the US, including a sandwich, chicken nuggets, fries, and a drink, has reportedly boosted foot traffic according to Placer.ai, a firm that tracks mobile device location data.
This challenging period for McDonald’s underscores the importance of adapting to changing consumer behaviors and economic conditions, as the company continues to navigate the evolving fast-food landscape.
