New York (AFP) – McDonald’s reported slower sales growth in the US market in the second quarter as executives blamed too many simultaneous promotional offers, including a World Cup campaign that disappointed. The fast-food chain said it remains committed to a value-oriented menu that has resonated in recent years amid inflation-weary consumers in its home market and overseas.
But US restaurants were overwhelmed in the just-finished quarter with “too many deployments,” according to McDonald’s Chief Executive Christopher Kempczinski. “We don’t have a strategy problem,” Kempczinski said on a conference call with analysts. “We simply didn’t execute at the level we needed to in the second quarter.” Profits edged up five percent to $2.4 billion, while revenues rose four percent to $7.1 billion. But comparable sales in the United States grew just 0.8 percent, much below the 3.9 percent posted in the first quarter. The average check size increased in the United States, but guest counts fell.
Executives said McDonald’s World Cup promotions had underperformed versus expectations, while suggesting that inconsistent implementation of value-oriented promotional deals was a bigger factor. This included a campaign centered on selling 10 items for under $3. Compared with promotions offering a meal combination around a fixed price, the under $3 drive left stores with more freedom on what to include. As a result, some franchisees opted for profit over market share, diluting the lift from the campaign. On top of that, McDonald’s also pulled back on some digital offers from earlier in the year.
“So you can imagine the number of questions that a customer asks as they approach the drive-through, or they go to the front counter and they ask, ‘Well where is this deal? I used to get this deal,'” Kempczinski said. Too many campaigns also left consumers feeling flooded. “It’s tough to break through when you have that many messages out there,” said Kempczinski. “You have a K-Pop Demon Hunters message, then you have a value message, then you have a beverage message, then you have a FIFA message.”
But simplifying marketing “is the execution opportunity” facing the chain, according to Kempczinski, who said the company is taking a “hard look” at the plan for the remainder of 2026. Besides the United States, which accounts for about 40 percent of sales, McDonald’s cited Germany, Australia, Britain, and Japan as stronger markets. The company continued to underperform in France, while it registered negative comparable sales in China. Shares rose 2.0 percent after midday.
© 2024 AFP
