McDonald’s has reported a larger-than-expected drop in sales, reflecting a continuing decline in demand despite efforts to attract customers with value meals. Consumer spending has slowed in the U.S., Europe, and China, as individuals seek cheaper meal options or prefer dining at home due to ongoing food inflation.
In the third quarter, global sales at locations open for at least a year fell by 1.5%, marking the largest decline in four years and exceeding analyst forecasts. This follows a 1% drop in the previous quarter, resulting in two consecutive periods of contraction for the first time since the height of the Covid-19 pandemic.
While U.S. sales grew by 0.3%, international markets experienced a 2.1% decline, particularly in France and the UK. Overall net profits decreased by 3% to $2.3 billion. Additionally, weakened consumer spending in China, coupled with geopolitical tensions in the Middle East, contributed to a 3.5% sales drop in McDonald’s licensed business, which operates through local partners.
The company has faced backlash over its perceived pro-Israeli stance, notably after acquiring its Israel franchise in April. This acquisition followed a controversial donation of free meals to the Israeli military by its former franchisee.
To counteract declining sales, McDonald’s has implemented £5 meal deals in the UK and $5 promotions in the U.S. CEO Chris Kempczinski emphasized a focus on affordability and value. Following a recent E. coli outbreak linked to Quarter Pounders, which affected over 75 individuals, McDonald’s has taken measures to restore consumer confidence.
Despite recent challenges, the company aims to regain momentum and improve its market position.