Profits fall at McDonald's as it redoubles value push
McDonald’s vowed Monday to win back consumers with better value offerings after it reported a rare sales decline that the company partly attributed to an exodus of inflation-weary low-income consumers.
All three of the chain’s operating regions experienced comparable sales declines, a significant weakening next to the year-ago results when global comparable sales jumped nearly nine percent.
For much of the recent period of rising consumer prices, McDonald’s garnered strong sales gains from diners who “traded down” to the fast food giant from more expensive rivals. Executives said the market had, however, shifted in the most recent period.
“We are seeing trade down, but what we’re seeing is that the loss of the low-income consumers is greater than the trade-down benefit,” said Chief Executive Christopher Kempczinski on a conference call.
“You’re seeing with that low-income consumer, in many cases, they’re dropping out of the market, eating at home and finding other ways to economize.”
Profits for the quarter ending June 30 were $2.0 billion, down 12 percent.
Revenues were essentially flat at $6.5 billion.