McDonald’s sales Crash in World’s Largest Economy
Same-store sales experienced their biggest domestic decline since the start of the COVID pandemic, falling for the second consecutive quarter.
Quick overview
- McDonald's reported a significant decline in same-store sales, marking the largest drop since the COVID pandemic began.
- The company's net income for the first quarter was $1.87 billion, down from $1.93 billion the previous year.
- Poor weather and cautious consumer behavior contributed to a 30.6 percent drop in same-store sales.
- Despite continued spending from wealthy consumers, it was not enough to offset declines from low- and middle-class customers.
McDonald’s released a mixed report for the quarter in the US on Thursday. Same-store sales experienced their biggest domestic decline since the start of the COVID pandemic, falling for the second consecutive quarter.
The fast-food juggernaut’s first-quarter net income was $1.87 billion, or $2.60 per share, compared to $1.93 billion, or $2.66 per share, the previous year. After deducting restructuring costs and other expenses, McDonald’s made $2.67 per share. Net sales decreased by 3% to $5.96 billion..
The chain experienced poor weather and a more cautious customer base, which caused same-store sales to drop 30.6 percent.
This is the biggest decline to hit McDonald’s home market since the 8.7 percent decline in the second quarter of 2020, when states imposed lockdowns to stop the spread of COVID-19.
CEO Chris Kempczinski stated that overall [quick-service restaurant] industry traffic from the low-income consumer cohort was down by almost double digits compared to the previous year’s quarter.
“QSR traffic from middle-class consumers decreased almost as much as it did a few months ago, which is a definite sign that the economic pressure on traffic has expanded.”.
According to executives, McDonald’s has a higher proportion of low- and middle-class customers than competitors within the industry.
Furthermore, even though wealthy consumers continue to eat out, their expenditures are insufficient to counteract the decline in business from other income groups. McDonald’s same-store sales in all its markets dropped 1% during the quarter.
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