McDonald’s MCD-N missed Wall Street estimates for growth in quarterly U.S. comparable sales on Thursday, as low-priced meal deals and limited-time offers failed to draw diners whose budgets have been strained by higher fuel and grocery costs.
After several years of price hikes, operators in the fast-food industry have been forced to rely more on value-driven promotions to revive demand as customers cut back spending.
The world’s biggest burger chain posted U.S. same-store sales growth of 3.9 per cent in the first quarter, missing expectations of a 4.2 per cent increase, according to data compiled by LSEG.
The slowdown at McDonald’s reflects a wider industry trend.
Several U.S. restaurant chains such as Wingstop WING-Q and Domino’s DPZ-N have reported weaker quarterly sales growth, citing a hit to customer spending from soaring gasoline prices caused by the Iran war.
Lower-income consumers are becoming more selective, Wall Street analysts have said, increasingly trading down to simpler, single-item orders rather than full meals.
Tim Hortons parent Restaurant Brands reports profit up from a year ago
McDonald’s U.S. traffic remained uneven through the first quarter, data from Placer.ai showed.
Same-store visits fell 1.3 per cent in January due to winter storms. Traffic rebounded 3.8 per cent in February on pent-up demand, but slipped in March to 1.2 per cent in a more muted response to new menu launches as rising fuel prices further hurt household budgets. To capture cost-conscious customers, McDonald’s has expanded its McValue platform with new US$3 and US$4 tiers in April.
Globally, McDonald’s comparable sales rose 3.8 per cent, narrowly missing analysts’ average expectation of 3.95 per cent, though it was an improvement from a 1-per-cent decline a year ago.
Sales in its business segment, where restaurants are operated by local partners, grew 3.4 per cent, led by Japan, while international market sales rose 3.9 per cent on demand in Britain, Germany and Australia.
Net income for the January-March quarter rose 6 per cent to US$1.98-billion. On an adjusted basis, McDonald’s earned US$2.83 per share, up from US$2.67 a year earlier.