Why they aren't 'McLovin' it' at the Golden Arches
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McDonald’s experienced a decline in sales at the start of the year, marking the second consecutive quarter with reduced numbers as consumers cut back on spending due to economic uncertainties.
In the US, where it generates the most revenue, same-store sales fell by 3.6 per cent. This is the chain’s largest drop since the 2020 COVID-19 pandemic peak when stay-at-home orders were in place.

The first quarter’s net income was reported as $US1.87 billion ($2.93 billion), down from $US1.93 billion ($3.03 billion) in the same timeframe last year. McDonald’s explained that last year included a Leap Day, providing an extra day for revenue, which impacted the current year’s sales figures.

McDonald’s had another tough earnings report as consumers pull back on their spending.(David Paul Morris/Bloomberg/Getty Images via CNN)

CEO Chris Kempczinski stated in a release that while consumers are “grappling with uncertainty,” he remains confident in McDonald’s “ability to navigate challenging market conditions and capture market share”.

During a discussion with analysts, Kempczinski mentioned that “geopolitical tensions added to the economic uncertainty and negatively affected consumer sentiment beyond expectations”.

Visits to restaurants in its largest markets, including the US, fell more than predicted.

Although he expects McDonald’s to “outperform” its competitors, the chain isn’t “immune to the volatility in the industry or the pressures that our consumers are facing”.

McDonald’s is also seeing worsening pullback in spending from low-income consumers, which is down nearly double digits versus a year ago.

And, unlike a few months ago, spending from middle-income consumers also “fell nearly as much, a clear indication that the economic pressure on traffic has broadened”.

The burger invented because no-one went to McDonald’s on Fridays

The chain’s blunt assessment of the economic environment mirrors that of other companies, with Chipotle, Yum! Brands, Domino’s Pizza and Starbucks all recently reporting meager earnings results as consumer sentiment sinks.

The first quarter heralded the release of its revamped value menu, which was supposed to rev up sales for budget-conscious customers. 

However, a new meal promotion with A Minecraft Movie (released by CNN’s sister company Warner Bros. Pictures) was perhaps more successful in driving visits, with a third-party tracking service measuring measurable spikes to its restaurants.

Shares of McDonald’s fell nearly 2 per cent in early trading.

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