McDonald's Earnings Fall Short, Stock Drops 15%

McDonald's Corporation announced disappointing quarterly earnings on Monday, with both earnings and revenue falling short of analysts' expectations. CEO Chris Kempczinski highlighted that the company faced significant external pressures, including the ongoing war in the Middle East, which negatively impacted performance across all divisions. The fast-food giant reported a decline in comparable sales globally, marking the first drop in same-store sales since the fourth quarter of 2020. In the latest quarter, McDonald's adjusted earnings per share were $2.97, below the anticipated $3.07, while revenue reached $6.49 billion, falling short of the expected $6.61 billion. The company's same-store sales in the U.S. decreased by 0.7%, a stark contrast to the 10.3% growth reported a year earlier, which was bolstered by the successful Grimace Birthday Meal promotion. The international markets also struggled, with a 1.1% decline in same-store sales, particularly affected by pricing competition and consumer boycotts in France related to the Gaza conflict. Executives acknowledged that high prices deterred diners, prompting a "forensic approach" to reassess value offerings. They are collaborating with franchisees to implement necessary adjustments to attract customers. The ongoing fallout from the Gaza conflict continues to affect sales in various markets, including China, where performance remains weak. McDonald's is actively seeking strategies to regain customer interest and improve its financial outlook.