McDonald’s Big Mac meal.
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McDonald’s Executives acknowledged Monday that diners believe the company’s prices are too high as lower-income consumers hesitate after years of high inflation.
During the company’s second-quarter earnings call on Monday, executives said they were taking a “forensic approach” to assess prices and try to create value. The company reported lower-than-expected second-quarter earnings as same-store sales fell in every division.
“We recognize that we have opportunities to improve our value execution in several large markets, including the U.S. Consumers continue to view us as the value leader compared to our primary competitors, but it is clear that we The value leader gap has narrowed recently.
Kempczinski said rising prices are making consumers reconsider their purchasing habits.
As prices rise and consumers cut back on spending, fast-food chains struggle to attract low-income diners. A recent LendingTree survey showed that more than 60% of respondents said they had cut back on fast food spending because it was too expensive.
McDonald’s executives said on an earnings call that low-income diners are not switching from the chain to other fast-food restaurants, but are eating out less frequently in most of the company’s global markets. The company found that consumers were retreating not just in the U.S. but globally, especially households in European markets.
“Ultimately, we expect that customers will continue to feel the pinch of the economy and a higher cost of living in a highly competitive environment for at least the next several quarters,” said McDonald’s U.S. president Joe Ehlinger. “As a result, we believe “
McDonald’s decided last week to extend its $5 value meals for an initial four-week period, saying it would entice customers back to its restaurants. Ninety-three percent of the company’s franchisees have pledged to extend the offer further into the summer.
June 25, the launch day of McDonald’s $5 meals, attracted 8% more visits than the average Tuesday visit so far in 2024, and over the next few days, as the chain surpassed this year’s Looking at the average number of daily visits to date, the pattern appears again.
Sales of the $5 meal plans have exceeded expectations, Erlinger said. With the highest rates among lower-income consumers, the deal increases the brand’s perception of value affordability. The offer has also started to increase guest numbers, but has not yet translated into sales growth, company executives said on a conference call.
The $5 Value Meal launches days before the end of Season 2.
“For 70 years, we’ve been a leader in value because that’s what the brand stands for, and frankly… we have an underlying competitive advantage in that we can buy products at a lower price than anyone else in the industry,” Kempczinski said. explain. “The key is, we know how to do it. We wrote the playbook about value and we’re working with our franchisees to make the necessary adjustments.”
—CNBC’s Amelia Lucas and Kate Rogers contributed reporting
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