Why McDonald’s Says It Has ‘Fallen Short’ This Year

Fast-food chains lamented slow restaurant traffic in the first half of the year. It hasn’t gone away, executives at McDonald’s (MCD) said today. 

McDonald’s shares were recently a bit lower after the company said third-quarter same-store sales were lower than Wall Street expected. On a conference call with analysts, CEO Chris Kempczinski said that “traffic has remained pressured, reflecting industry-wide challenges.”

“While we anticipated a challenging environment in 2024, our performance so far this year has fallen short of our expectations,” Kempczinski said on the call, a transcript of which was made available by AlphaSense. 

Consumers, notably lower-income ones, continue to eat at home more frequently, he said; the company has repeatedly extended the life of a value meal offering it says has helped bring lower-income diners back to the brand. An increase in U.S. same-store sales was offset by declines elsewhere, McDonald’s said. 

Lower restaurant traffic has affected companies across the industry. French-fry maker Lamb Weston (LW), a McDonald’s supplier, said earlier this month that it expected that to continue into next year. Executives at ConAgra (CAG) and spice company McCormick (MKC) have lately echoed those sentiments. 

For McDonald’s—and other companies in the industry—the climate seems to point toward a continued battle for the dollars of value-minded diners. 

“We have spoken before about our customers recognizing us as the value leader versus our key competitors, but our value leadership gap has shrunk,” Kempczinski said on the call. “In response, we have moved with urgency in partnership with our franchisees to improve our value offerings in most of our major markets.”