McDonald's Sales Miss Estimates As Customers Cut Back Spending

By Reuters
McDonald's Sales Miss Estimates As Customers Cut Back Spending

McDonald's fell short of Wall Street estimates for first-quarter sales on Tuesday 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%, with the company saying consumers turned 'more discriminating with every dollar they spend'. Analysts had estimated a 2.35% rise, according to LSEG data.

International Sales

The company has raised prices by roughly mid- to high-single-digit percentage over the last 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% of its overall revenue in 2023, declined 0.2%, offsetting positive trends from Japan, Latin America and Europe. Analysts had expected a 0.98% rise for the unit.

Higher Competition

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.

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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 $4 price point.

Inflation

First-quarter same-store sales grew 2.5% in the United States, sharply lower than a 12.6% growth last year and slightly below estimates of a 2.55% growth, signaling 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 $2.70. Analysts had estimated $2.72, according to LSEG data. Total operating costs and expenses increased 2% to $3.43 billion (€3.19 billion).