UK (Commonwealth) _ Due to lackluster demand in the UK, France, and other international countries, McDonald’s sales have decreased for the second straight quarter.
Between July and September, McDonald‘s worldwide sales at locations that have been operating for at least a year dropped by 1.5%, the largest drop in four years and more than twice the amount analysts had predicted. It came after a 1% decline from April to June, the contraction’s first two quarters in a row since the COVID crisis peaked in 2020.
France and the UK led the 2.1% decline in international markets, while the US saw a 0.3% increase in sales, signaling a return to growth. Profits dropped 3% to $2.3 billion.
Despite a slight increase in sales in the significant American market, the business reported a 1.5% decline in global comparable sales for the third quarter of 2024. The business, which has been attempting to entice customers back to burgers and fries following sharp price increases in recent years prompted by inflation, benefitted from the increase in US sales.
According to McDonald’s, “effective value and marketing campaigns featuring the core menu” have contributed to an increase in US sales. However, due to negative comparative sales in certain regions, including France and the UK, sales in its overseas-operated markets decreased by 2.1%.
The company’s total revenue increased by 3% to $6.9 billion, but its net profit decreased by 3% to $2.3 billion.
Chairman Chris Kempczinski stated that McDonald’s will remain committed to offering customers an unmatched experience with straightforward, daily value and affordability that they can rely on while they continue to be frugal with their spending.
Additionally, sales declined in China and the Middle East, where the effects of regional conflicts had a negative influence on business.
At Hargreaves Lansdown, Derren Nathan, head of equity research, stated: “McDonald’s comparable restaurant takings have declined for the second straight quarter, implying that the anticipated increase in volumes has not yet been achieved by the Golden Arches’ new emphasis on value goods.
It follows a significant E. coli incident that apparently resulted in one fatality and numerous illnesses after consuming quarter-pounder burgers from McDonald’s. The business announced on October 28 that it has started selling its beef patties after Colorado Department of Agriculture (CDA) samples showed no signs of the bacteria.
In reaction to the epidemic, McDonald’s stopped serving the sandwich at around a sixth of its US locations last week. Restaurants in the UK were unaffected.
McDonald’s North America chief supply chain officer Cesar Pina stated on Monday: “It seems that the problem is limited to a specific component and region, and we are still quite certain that our supply chain is free of any tainted products associated with this incidence.
Despite efforts to entice consumers back with value meals, McDonald’s has reported another larger than anticipated decline in revenue as demand continues to decrease.
Consumer spending in the US, Europe, and China has been slow or declining recently as individuals, tired of years of high food inflation, choose to stay at home or seek out less expensive meal fixes.
Its licensed division, which consists of restaurants operated by local partners, saw a 3.5% decline in sales as a result of weaker consumer spending in China and the ongoing effects of the Middle East war.
Due to their suspected financial ties to Israel and perceived pro-Israeli position, McDonald’s has been the target of boycotts and protests. In April, the business reclaimed ownership of 225 restaurants with over 5,000 employees after purchasing its 30-year-old Israel franchise from Alonyal.
Alonyal had declared that it would be providing the Israeli IDF with complimentary lunches soon after the October 7 attack by the Palestinian Islamist organization Hamas.
The US fast-food business has attempted to attract customers by offering $5 limited-time specials in the US and £5 meal bargains in the UK. Competitors like Wendy’s, Burger King, and Taco Bell have also used meal packages and temporary promotions to entice customers, particularly those from lower-income households.
A fifth of McDonald’s 14,000 locations in the US temporarily stopped offering Quarter Pounders last week. Given the linkage of the virus to a single vegetable supplier in Colorado, the use of sliced onions in the hamburgers is likely the cause. McDonald’s ceased purchasing onions from the vendor.
