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McDonald’s suffered a second consecutive fall in sales in the third quarter, as it struggled with weak consumer demand in international markets such as France, the UK, the Middle East and China.
The fast-food chain on Tuesday reported that global comparable sales slid 1.5 per cent year on year, more than the 0.6 per cent decrease estimated in a Visible Alpha survey of analysts.
The decline was McDonald’s first back-to-back fall in sales since the Covid-19 pandemic in 2020, following a 1 per cent slide in the second quarter, as the chain fights to win back business from customers strained by years of food inflation, especially those from lower-income households.
Revenue in the third quarter rose 3 per cent to $6.9bn, beating the consensus forecast of $6.8bn. However net profit fell 3 per cent to $2.26bn, slightly below estimates of $2.3bn.
“We will stay laser-focused on providing an unparalleled experience with simple, everyday value and affordability that our consumers can count on as they continue to be mindful about their spending,” said Chris Kempczinski, chief executive.
In a bid to lure US customers who have balked at the higher cost of burgers, fries and soft drinks, McDonald’s has extended a $5 meal deal introduced during the summer. There are signs that promotional activity has been working: comparable sales at McDonald’s roughly 13,500 US restaurants rebounded after a dip in the second quarter, rising by 0.3 per cent.
Despite the pick-up in American sales, hopes for a revival have been overshadowed by an outbreak of E. coli linked to onions used on Quarter Pounder hamburgers in parts of the central US. The outbreak was detected this month, denting the chain’s shares, but coming after the end of the third quarter.
McDonald’s is resuming sales of Quarter Pounders in the region this week after health authorities and the company traced the contamination to a single vegetable processor in Colorado. McDonald’s has stopped buying onions from the supplier.
Global comparable sales encompass restaurants open for at least 13 months in both the US and foreign markets. In McDonald’s international markets where it operates and franchises restaurants, comparable sales dropped 2.1 per cent, “driven by France and the UK”, the company said.
Comparable sales in international licensed markets fell 3.5 per cent. McDonald’s cited the effects of the war in the Middle East and weaker sales in China, even as its Latin American business grew.
McDonald’s in August started offering sets of collectible cups in more than 30 countries, which Bernstein Research said could lead to an increase in comparable sales. The company had 42,406 restaurants worldwide as of June, 95 per cent of them franchised.
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