06 February 2024 , 14:39
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After three years of spectacular sales growth for McDonald's, the fast food chain reveals that sales have slowed down.
The famous burger company said this week that its same-store sales are likely to increase by 3% to 4%, returning to typical figures. This is a decrease from the double-figure growth seen in 2021 and 2022, and 9% growth last year.
"I think we are moving into a 2024 that's going to look more like what you would have considered a typical year prior to COVID and all the things that have gone on," said Chris Kempczinski, the president and CEO of McDonald's. Shares in McDonald's fell by 3.5% in early deals.
The fast food giant got a peek at future trends in the final quarter of last year, when it suffered sales losses in the Middle East and fewer visits from lower-income customers. McDonald's worldwide same-store sales climbed by 3.4% in the final three months of the year, but this was well underneath the anticipated 4.7%.
McDonald's Israel sparked outrage in the Middle East after announcing it was giving free meals to Israeli soldiers. This led to a drop in sales in Muslim-majority countries like Malaysia and Indonesia, as well as nations with large Muslim populations like France.
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McDonald's CEO, Kempczinski, said: "So long as this conflict, this war, is going on... we're not expecting to see any significant improvement in this," and "It's a human tragedy, what's going on, and I think that does weigh on brands like ours." Starbucks also faced boycotts due to its perceived support for Israel.
McDonald's Chief Financial Officer, Ian Borden, said: "We certainly know consumers are more wary - and weary - of pricing and we're going to continue to be consumer-led in our pricing decisions as we look forward to 2024. " Despite consumer sentiment being at an all-time low in China, McDonald's is planning to offer more deals to compete with other brands.
McDonald's had a strong performance overall. Viral marketing campaigns like last spring's Grimace shakes and improved menu items helped increase their annual revenue by 10% to nearly £20 billion ($25bn).
In the fourth quarter, McDonald's revenue increased by 8% to £5 billion ($6.4bn), which met analysts' expectations. Their net income also rose by 7% to £1.6 billion ($2bn).
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