McDonald’s Corp.’s third-quarter sales fell short of Wall Street expectations after weakness in international markets such as France, China, Britain and the Middle East. Sales at restaurants open in at least 13 months fell 1.5 percent, worse than analysts had expected. The U.S. was a bright spot with growth of 0.3 percent, according to a company statement on Tuesday.
McDonald’s is working to reverse the decline in traffic across all of its geographies, which is due to slower consumer spending, higher inflation and boycotts against American brands in the Middle East. Efforts include a worldwide value push and a limited-time release of vintage McDonald’s cups.
The stock was down 0.4% in New York on Tuesday at 2:22 p.m. Shares are little changed for the year, while the S&P 500 index is up 22%.
McDonald’s said in a call with analysts that its $5 meal deal in the U.S. improved the brand’s perception of affordability, resonated with lower-income consumers and led to positive changes in guest numbers. The company said it will introduce a new value platform in early 2025.
“For the first time in over a year, we gained share with low-income consumers,” said Chief Financial Officer Ian Borden.
Citigroup research analyst Jon Tower said in a note to clients that the results gave “encouraging insight” into how McDonald’s, despite its size, has quickly changed its sales momentum through a shift toward value and marketing. can do
Earnings, excluding certain items, were $3.23 per share in the quarter. Total sales at franchised and company-owned restaurants were flat.
American setback
Analysts and investors are already looking ahead to the fourth quarter, trying to gauge the impact of the E. coli outbreak linked to the company’s quarter pounders that came to light last week. In response, the chain pulled the burgers from 20% of its more than 13,000 US stores.
On Tuesday, McDonald’s said it did not expect any material impact from the issue. Still, the outbreak has put a wrench in the chain’s near-term recovery, Citigroup’s Tower said.
The company said Oct. 27 that it would resume selling quarter-pounders after ruling out beef patties as the source of the pathogen, instead citing pre-cut onions as the likely culprit. The 900 restaurants that sourced their products from a supplier’s facility linked to the outbreak will serve burgers without onions.
According to data from Bloomberg Second Measure, which tracks debit and credit card transactions, McDonald’s sales fell across the U.S. after the outbreak became public. That dropped to 33 percent in Colorado, the state with the most cases, according to Placer.ai’s cellphone traffic data.
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