McDonald’s reported strong quarterly earnings and revenue, surpassing analysts’ expectations, with global same-store sales increasing by 3.8%, the biggest jump in nearly two years.
Why it matters: Despite the improved performance, CEO Chris Kempczinski expressed concerns about the economic health of low-income consumers, who continue to visit McDonald’s less frequently compared to middle- and high-income customers.
The details:
- U.S. restaurants saw a same-store sales growth of 2.5%, reversing two consecutive quarters of domestic declines.
- The chain’s international developmental licensed markets division, which includes Japan and China, reported same-store sales growth of 5.6%.
- The international operated markets segment saw a same-store sales growth of 4%, with significant gains in countries like the United Kingdom, Australia, and Canada.
- McDonald’s value and affordability scores from consumers have also improved in key international markets.
Kempczinski credited the chain’s value offerings, marketing strategies, and new menu items for the 6% increase in system sales during the quarter.
What they’re saying:
- “Certainly, overall quick-service restaurant traffic in the U.S. remained challenging, as visits across the industry by low-income consumers once again declined by double digits versus the prior year period,” Kempczinski commented.
- “On our international side, it’s not as competitive a market as it is in the U.S.,” Kempczinski said. “It’s easier for us to stand out and represent good value internationally.”
What’s next: McDonald’s is working closely with its U.S. franchisees to develop strategies to address the challenges of attracting low-income consumers, including extending promotional prices and introducing new menu items.