McDonald’s posts biggest global sales decline in four years | McDonald’s

McDonald’s posted another bigger-than-expected drop in sales as demand continues to weaken despite trying to lure customers back with cheap meals.

Consumer spending has been sluggish or declining in the U.S., Europe and China in recent months as people exhausted by years of high food inflation sought cheaper meals or stayed home.

McDonald’s global sales at stores open at least a year fell 1.5% between July and September, the sharpest decline in four years, more than double what analysts had forecast. This was followed by a 1% decline in the April-June period – the first two consecutive quarters of decline since the peak of the Covid crisis in 2020.

While the US returned to growth in recent results with a 0.3% increase in sales, international markets fell 2.1%, driven primarily by France and the UK. Net income fell 3% to $2.3 billion.

Weaker consumer spending in China and the ongoing impact of war in the Middle East led to a 3.5% decline in sales in its licensing business, where restaurants are operated by local partners.

McDonald’s has faced boycotts and protests over its perceived pro-Israel stance and alleged financial ties to the country. In April, the company bought its 30-year-old Israeli franchise from Alonyal, taking ownership of 225 restaurants with more than 5,000 employees. Shortly after the attack by the Palestinian Islamist group Hamas on October 7, Alonyal announced that he would donate free meals to the Israeli military.

The US fast food chain has tried to woo customers with £5 meal deals in the UK and limited-time $5 promotions in the US. Competitors such as Wendy’s, Burger King and Taco Bell have also resorted to meal kits and limited-time offers to attract customers, particularly those from lower-income households.

McDonald’s Chief Executive Chris Kempczinski said the company remains “laser-focused” on everyday convenience and affordability as customers “continue to watch their spending.” The $5 meal deal in the U.S., which launched in June, has been extended through December at most locations.

He apologized for the recent E. coli outbreak linked to Quarter Pounders, which infected 75 people and killed at least one person. He said the situation appeared to be contained and he was “confident that eating at McDonald’s was safe.”

Last week, McDonald’s temporarily stopped serving Quarter Pounders at a fifth of its 14,000 U.S. restaurants. The onion slices used in the hamburgers are likely the cause of the infection, which can be traced to a single vegetable supplier in Colorado. McDonald’s stopped buying onions from the supplier. The company’s shares lost nearly 7% last week and fell 2% before the market opened on Tuesday, before recovering to trade nearly 1% higher.

The company’s chief financial officer, Ian Borden, said: “The most significant events are behind us and the work to be done now is focused on restoring consumer confidence and returning our US business to this strong momentum.”