McDonald’s fell short of Wall Street estimates for first-quarter sales on Tuesday (Apr 30) as budget-conscious consumers cut back on restaurant meals and the Middle East conflict weighed on the burger chain’s international sales.
Global comparable sales growth slid for the fourth straight quarter to 1.9 per cent, with the company saying consumers turned “more discriminating with every dollar they spend”. Analysts had estimated a 2.35 per cent rise, according to LSEG data.
The company has raised prices by roughly mid- to high-single-digit percentage over the past year in response to a rise in costs of eggs and other raw items.
Comparable sales in the company’s International Developmental Licensed Markets segment, which made up 10 per cent of its overall revenue in 2023, declined 0.2 per cent, offsetting positive trends from Japan, Latin America and Europe. Analysts had expected a 0.98 per cent rise for the unit.
Earlier in March, McDonald’s CFO Ian Borden had warned of a sequential fall in international sales in the first quarter, pressured by the conflict in the Middle East and a sluggish Chinese economy, its second-largest market after the United States.
Higher competition for breakfast hour spending in the United States has prompted the burger giant to lean on low-priced menu choices, including breakfast value bundles and a Dollar Menu under the US$4 price point.
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First-quarter same-store sales grew 2.5 per cent in the United States, sharply lower than a 12.6 per cent growth last year and slightly below estimates of a 2.55 per cent growth, signalling that cash-strapped Americans remained picky about offers at fast-food chains amid still-high inflation.
McDonald’s posted quarterly adjusted per-share profit of US$2.70. Analysts had estimated US$2.72, according to LSEG data. Total operating costs and expenses increased 2 per cent to US$3.43 billion. REUTERS
