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Key Takeaways
- McDonald’s reported second-quarter earnings below what analysts had projected Monday, as comparable sales declined from last year.
- Revenue was flat year-over-year despite analysts projecting growth, while profits fell about 12%.
- The chain’s recent “$5 Meal Deal” promotion has reportedly provided a boost to sales, but the launch date means it will have more of an impact on third-quarter earnings.
McDonald’s (MCD) second-quarter earnings fell short of analysts’ estimates Monday as lower foot traffic drove comparable store sales down from last year’s levels.
The fast food giant reported $6.49 billion in total revenue, nearly identical to the second quarter of 2023. Despite the similar revenue, McDonald’s net income fell 12% year-over-year to $2.02 billion.
Analysts had expected revenue to grow to $6.63 billion, while profits were projected to slip by a smaller amount to $2.24 billion, according to consensus estimates compiled by Visible Alpha.
Comparable Sales Decline as Consumers Are Still Weary of High Prices
McDonald’s global comparable sales fell 1% from last year as sales decreased in the U.S. and abroad. The company said foot traffic fell in U.S. locations as prices rose, while lower sales in several countries like France and China offset improvement in Japan and Latin America.
“As consumers are more discriminating with their spend, we are focused on the outstanding execution of delivering reliable, everyday value and accelerating strategic growth drivers like chicken and loyalty,” McDonald’s Chief Executive Officer (CEO) Chris Kempczinski said.
Customers growing weary of higher prices has negatively impacted McDonald’s sales this year, leading the company to launch a value meal promotion last month. While it only contributed to the last few days of second-quarter results and will primarily impact Q3 figures, recent reports have indicated that McDonald’s “$5 Meal Deal” promotion has been a success and could continue into August.
Shares of McDonald’s have lost about 15% of their value so far this year but are up 1% before the opening bell.