Key facts
- McDonald's U.S. comparable sales grew 0.8% in the second quarter, missing analyst estimates.
- Consumers cut back on restaurant spending due to economic worries.
- McDonald's implemented value deals and promotions to counter competition and attract diners.
- Global comparable sales increased 1.3%, slowing from the previous year.
- Skye Anderson was appointed to lead McDonald's U.S. business.
- Net income increased 5% to $2.36 billion.
McDonald's U.S. comparable sales growth slowed to 0.8% in the second quarter, falling short of the 1.06% increase analysts had predicted. The company attributed the disappointing performance to consumers cutting back on restaurant spending amid economic concerns, despite efforts to attract diners with value deals and promotions.
Higher prices for essential goods and fuel have reduced discretionary spending for lower-income consumers, a key demographic for McDonald's. CEO Chris Kempczinski had previously noted that macroeconomic uncertainty was affecting consumer behavior. The company's initiatives, including a revamped McValue platform, an under-$3 menu, and specialty beverages, were unable to fully offset muted demand and tough comparisons to strong promotional periods in the prior year.
Globally, McDonald's comparable sales rose 1.3%, a deceleration from 3.8% growth a year ago. Sales in international operated markets, including Europe, grew 1.5%, down from 4% previously, with analysts expecting softer demand due to high energy costs and heatwaves. Sales in markets operated by local partners slowed to 1.9% from 5.6% a year prior.
In a separate development, McDonald's named veteran Skye Anderson to lead its U.S. business, succeeding Joe Erlinger. The company reported a 5% increase in net income to $2.36 billion for the second quarter, with adjusted earnings per share rising to $3.38 from $3.19 a year earlier.