McDonald’s Corp. reported disappointing third-quarter sales, falling short of Wall Street expectations due to weakness in international markets like France, China, the UK, and the Middle East, according to Bloomberg.
Same-store sales, a key indicator of restaurant performance, declined by 1.5%, a steeper drop than analysts anticipated. While the US market saw a modest 0.3% increase, it wasn’t enough to offset the slump overseas.
The company attributed the global sales slowdown to several factors, including consumer reluctance to spend due to inflation, boycotts against American brands in the Middle East, and a broader trend of customers being more conscious of their spending.
In an attempt to combat these challenges, McDonald’s has launched a global value push, offering a $5 meal deal in the US and introducing vintage McDonald’s cups for a limited time. CEO Chris Kempczinski stated that the company is focused on providing “simple, everyday value and affordability” to appeal to budget-conscious consumers.
Despite the sales struggles, McDonald’s reported earnings per share of $3.23, excluding certain items. Total sales across franchised and company-owned restaurants remained flat.
However, the shadow of an E. coli outbreak linked to Quarter Pounders hangs over the company’s fourth-quarter prospects. The outbreak, which became public last week, led to the temporary removal of Quarter Pounders from 20% of McDonald’s US stores. While the company ruled out beef patties as the source of the pathogen and plans to resume selling the burgers without pre-slivered onions, the incident has already impacted sales.
Bloomberg Second Measure data, which tracks debit and credit card transactions, shows a decline in US sales following the outbreak’s publicity. Placer.ai, a company that analyzes cellphone mobility data, reported sales declines of up to 33% in Colorado, the state with the highest number of E. coli cases.
The impact of the outbreak on fourth-quarter earnings remains uncertain, but the incident has undoubtedly added another layer of complexity for the fast-food giant.
McDonald’s stock fell 0.3% in premarket trading in New York. While the stock is up 0.1% for the year, it lags behind the S&P 500 index’s 22% gain.
