Reason McDonald’s has surprise drop in global sales for first time in years

Fast food titan McDonald’s has taken a hit with a surprise double-digit dip in sales worldwide for the first time in nearly four years.

The chain’s net income fell 12% to $2billion, or $2.80 per share in the second quarter, from June 2023 to June of this year amid inflation and higher prices.

McDonald’s expects sales to continue to be down for the next few quarters, and is working to make adjustments to reverse the trend.

‘The biggest hit for McDonald’s is the low-income consumer has really cut back on visits and that is more than offsetting the typical trade down McD normally sees in tougher economic times,’ stated Edward Jones analyst Brian Yarbrough.

McDonald’s president, chairman and CEO Chris Kempczinski told investors on Monday ‘we are working to fix that with pace’.

‘Consumers still recognize us as the value leader versus our key competitors, it’s clear that our value leadership gap has recently shrunk,’ he said.

McDonald’s offered a $5 meal deal offering a McDouble or McChicken with four-piece McNuggets, small fries and a fountain drink, at many of its locations. It was supposed to expire at the end of July but some locations are planning to extend it into August to boost sales, reported Fox Business.

Some analysts believe meal deals are the key to McDonald’s bouncing back.

‘Even though things are soft now, they should be getting better in the back half of the year… with better value on the menu,’ said Brian Mulberry, a client portfolio manager at Zacks Investment Management.

The dip comes as McDonald’s customers have recently complained of high priced items.

Earlier, an angry McDonald’s customer took to social media to complain about being charged more than $7 for an Egg McMuffin at a franchise in Fairfield, Connecticut.

Following that viral outrage, Kempczinski in an earnings call with analysts in February vowed to lower prices. He acknowledged at the time that customers making less than $45,000 per year had stopped purchasing McDonald’s food.

‘Eating at home has become more affordable,’ Kempczinski said at the time. ‘The battleground is certainly with that low-income consumer.’

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