McDonald’s has experienced its first decline in global sales in over three years as inflation pressures consumers to opt for cheaper alternatives and reduce dining out.
The company reported a 1 percent decrease in worldwide sales for the April-June period, marking the first drop since the last quarter of 2020, when the COVID-19 pandemic and government restrictions led to widespread business closures and kept many people at home.
McDonald’s CEO Chris Kempczinski noted that consumers have become more selective with their spending. Previously, the fast-food chain benefited as consumers shifted from pricier restaurants to McDonald’s. However, Kempczinski observed a shift: "We are seeing trade down, but the loss of low-income consumers is greater than the trade-down benefit," he explained during a conference call with investors.
He pointed out that many low-income customers are opting to eat at home and find other ways to save money. Although customers still view McDonald’s as the best-value fast-food option, the "value leadership gap" with competitors has narrowed.
“We are working to fix that with pace,” Kempczinski stated.
Executives highlighted the success of a $5 meal deal introduced in June, which exceeded sales expectations. This promotion will be extended at most US locations beyond August.
“We are determined to regain market share in all major markets, regardless of current conditions. This won’t happen overnight, but it will happen,” Kempczinski asserted.
