On Monday McDonald’s surprised everyone by reporting a decrease in worldwide sales. This is the first decline since 2020 as consumers appear to be shying away from McDonald’s higher priced menu items. Persistent inflation over the past 2 years has forced lower-income consumers to look for more affordable options at home and made fast food chains work on their value menu to attract customers. McDonald’s stock ended up increasing by roughly 4% even though sales decreased on Monday due to the $5 value meal beating expectations. Due to the success of the $5 meal McDonald’s is trying to extend the deal past its current end date of August.
U.S. sales fell by 0.7% last quarter whereas a year ago sales increased by 10.3%. Brair Yarbrough an analyst at Edward Jones said, “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 McDonald’s normally sees in tougher economic times.” Though Brain Mulberry, a client portfolio manager at Zacks Investment Management stated that “Even though things (traffic) are soft now, they should be getting better in the back half of the year … with better value on the menu.”
Looking internationally sales dropped by 1.1% due to multiple factors. Currently a slower than expected recovery in China and consumer boycotts in the Middle East due to the Gaza war has hurt McDonald’s international sales.
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