McDonald’s sales dropped for the 2nd quarter in a row as customers keep tightening their belts

Customers are seen through the windows of a McDonald’s store in Tokyo 

Global sales at McDonald’s have fallen for a second consecutive quarter as the fast-food chain struggled in international markets, especially France, the UK, China, and the Middle East.

Sales were down 1.5% in its third quarter, following from a 1% slide in the previous quarter, ending June 30.

Comparable sales in the US were virtually flat, up 0.3% from the same period in 2023, while sales in international markets dropped 2.1%. Sales in licensed international markets fell 3.5%.

“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,” McDonald’s CEO Chris Kempczinski said in the earnings release.

While sales dropped, the Golden Arches’ revenue increased 3% to $6.9 billion, beating the $6.82 billion figure that was the consensus of analysts.

Net income declined 3%, down to $2.26 billion, down from $2.32 billion in the last quarter.

Shares in McDonald’s fell 2.7% in premarket trade after the results were announced.

Fast-food restaurants have struggled with food inflation since the COVID-19 pandemic. The most recent US consumer price index, released in early October, showed that the cost of food away from home rose 4% in the prior 12 months, significantly higher than gains in both grocery store prices and the overall CPI.

Chains, including McDonald’s, have responded to the soaring cost of ingredients and labor by raising menu prices. Consumers have felt the strain of rising costs. Analysts have said that some consumers are comparing the rising cost of fast food to the slowing rate of grocery inflation and choosing to cook more often at home instead of eating out.

Lower-income customers have particularly felt the pinch.

“The decline in comparable sales signals that consumers continue to retrench from eating out,” Neil Saunders, managing director of GlobalData’s US retail and consumer division, told B-17.

“Negative comparable sales and higher costs have also put some pressure on the bottom line where both operating and net income are down,” he said.

It is currently uncertain how the recent E. coli outbreak might affect McDonald’s fourth-quarter results. One person died, and at least 75 were sickened, all from slivered onions used in some Quarter Pounder burgers.