McDonald’s sales miss estimates as customers cut back spending

By Thomson Reuters Apr 30, 2024 | 6:06 AM

(Reuters) -McDonald’s fell short of Wall Street estimates for first-quarter sales on Tuesday as budget-conscious consumers cut back on restaurant meals and the Middle East conflict weighed on the burger chain’s international sales.

The company’s shares fell about 2% in premarket trading, after slipping nearly 8% so far this year.

Global comparable sales growth slid for the fourth straight quarter to 1.9%, with the company saying consumers turned “more discriminating with every dollar they spend”. Analysts had estimated a 2.35% rise, according to LSEG data.

The company has raised prices by roughly mid- to high-single-digit percentage over the past year in response to a rise in costs of eggs and other raw items.

Comparable sales in the company’s International Developmental Licensed Markets segment, which made up 10% of its overall revenue in 2023, declined 0.2%, offsetting positive trends from Japan, Latin America and Europe. Analysts had expected a 0.98% rise for the unit.

Earlier in March, McDonald’s CFO Ian Borden had warned of a sequential fall in international sales in the first quarter, pressured by the conflict in the Middle East and a sluggish Chinese economy, its second-largest market after the United States.

Higher competition for breakfast hour spending in the United States has prompted the burger giant to lean on low-priced menu choices including breakfast value bundles and a Dollar Menu under the $4 price point.

First-quarter same-store sales grew 2.5% in the United States, sharply lower than a 12.6% growth last year and slightly below estimates of a 2.55% growth, signaling that cash-strapped Americans remained picky about offers at fast-food chains amid still-high inflation.

McDonald’s posted quarterly adjusted per-share profit of $2.70. Analysts had estimated $2.72, according to LSEG data. Total operating costs and expenses increased 2% to $3.43 billion.

(Reporting by Savyata Mishra in Bengaluru; Editing by Saumyadeb Chakrabarty)