McDonald's (MCD.US) reported its first-ever same-store sales decline in Q2 since 2020, as US traffic declined.
1min read McDonald's (MCD.US) second-quarter sales fell for the first time since 2020, missing analysts' expectations for modest growth. The fast-food chain reported $6.49 billion in revenue, down from $6.49 billion a year earlier; net income of $2.022 billion, down 12% year-on-year; and adjusted earnings per share of $2.8, down from $3.15 a year earlier.
Under non-GAAP, McDonald's reported adjusted earnings per share of $2.97, below the consensus estimate of $3.07.
Comparable declined 1% year-on-year, with all of its geographic segments reporting lower sales. In the U.S., the trend was partly driven by a decline in traffic.
Global customers have been cutting back on McDonald's spending due to years of rising prices and tight family budgets, and the company's sales growth has slowed this year. The fast-food chain launched a $5 meal deal in the U.S. at the end of the quarter to try to convince consumers that it is still an affordable option.
Preliminary results suggest the company is attracting customers, though sales growth won't be seen until later this year. It also rolled out limited-time menu items in an effort to attract customers.
The CEO said in a statement that the chain would continue to focus on "reliable everyday value" as customers become more discerning about what they spend on food. Other strategic priorities include McDonald's chicken lineup and its loyalty program.
Outside the U.S., resistance to the conflict between Israel and Palestine continued to hurt sales in the Middle East and other markets, including the chain's own. The company had warned previously that the turmoil would continue until the conflict was resolved. McDonald's also reported same-store sales declines in China and France.
Systemwide sales, including new store openings, also declined, indicating that new stores aren't offsetting the weakness of existing stores.
McDonald's is implementing an ambitious expansion plan to have 50,000 stores worldwide by 2027, up from about 42,000 at the beginning of this year. The company also maintained its guidance for new store openings and operating margins.