McDonald's The company reported mixed quarterly results on Tuesday, as the reorganization affected its profits and the boycott hurt its sales in the Middle East.
The company also continues to see consumers around the world cutting back on their restaurant spending.
“Consumers continue to be more discerning with every dollar they spend, facing higher prices in their daily spending, putting pressure on the (quick-service restaurant) industry,” CEO Chris Kempczinski said in a company statement. Conference call.
He added that McDonald's should focus on affordability to attract customers.
McDonald's shares fell more than 3% in pre-market trading.
Here's what the company reported compared to what Wall Street was expecting, based on a survey of analysts conducted by LSEG:
Earnings per share: $2.70 adjusted vs. $2.72 expected Revenue: $6.17 billion vs. $6.16 billion expected
McDonald's reported first-quarter net income of $1.93 billion, or $2.66 per share, up from $1.8 billion, or $2.45 per share, a year earlier. The company recorded a $35 million pre-tax charge associated with its reorganization, which was announced more than a year ago.
Excluding restructuring charges, the fast food giant earned $2.70 per share.
Net sales rose 5% to $6.17 billion. The company's global store sales rose 1.9% in the quarter, below StreetAccount's estimate of 2.1%.
McDonald's reported U.S. same-store sales growth of 2.5%, missing expectations of 2.6%. The average check grew thanks to higher menu prices, the chain said. But by raising prices, McDonald's has also scared off some of its low-income customers.
The company is working on a national value deal in the U.S., and while the strategy could attract more customers, franchisees may push back because such promotions could cut into their profits, Kempczinski said.
“Our U.S. leadership team works closely with our owners and operators,” said CFO Ian Borden.
In addition, the chain has rolled out an improved version of its burgers across the country, with an ad featuring a Hamburglar mascot, as it tries to convince customers that its prices are worth it. The company's chefs are also working on a larger burger, and it plans to test it in several markets later this year before launching globally.
A month into the second quarter, McDonald's U.S. store sales remained roughly flat, executives said.
Demand in the company's licensed international development markets was weaker. McDonald's said same-store sales in the segment fell 0.2%, marking the first time since the pandemic that a division of the chain reported a decline in same-store sales.
This sector includes restaurants in the Middle East, which have been affected by the war between Israel and Hamas and the related boycott, which began after Israeli licensee McDonald's offered discounts to soldiers. Earlier this month, McDonald's bought 225 restaurants operated by its Israeli franchisee.
However, the company said same-store sales in other licensed markets, such as Japan and Latin America, rose during the quarter. McDonald's' International Markets segment, which includes Germany and the United Kingdom, had same-store sales growth of 2.7%. Same-store sales in France declined in the quarter.
