McDonald’s Faces Decline in Same-Store Sales Amid Inflation Concerns

In a significant shift, McDonald’s reported a decline in global same-store sales for the first time in nearly four years during the second quarter, attributing the drop to inflation-weary consumers opting for cheaper dining alternatives. The fast-food giant is actively seeking solutions, including the introduction of meal deals and new menu items, but anticipates continued challenges in same-store sales over the coming quarters. CEO Chris Kempczinski acknowledged the shrinking value leadership gap compared to competitors and emphasized the urgency of addressing these issues. In the U.S., same-store sales dipped nearly 1%, reflecting a broader trend in the fast-food industry, where customer traffic has decreased by 2% in the first half of the year, according to market research firm Circana. The decline is not limited to the U.S.; McDonald’s also experienced reduced store traffic in France and the Middle East, where perceptions of the company’s stance on geopolitical issues have led to boycotts. To combat these challenges, McDonald’s introduced a $5 meal deal in U.S. restaurants, which has reportedly exceeded sales expectations and attracted lower-income consumers back to its outlets. The company is also seeing positive results from similar initiatives in Germany and the United Kingdom, indicating a potential path forward. Despite these efforts, McDonald’s reported flat revenue of $6.5 billion for the quarter, slightly below Wall Street expectations, while net income fell 12% to $2 billion, or $2.80 per share, highlighting the ongoing pressures the company faces in a competitive market.