McDonalds is to reconsider its pricing strategy after it saw worldwide sales fall in the last financial quarter – the first time it has happened since the Covid pandemic.
The fast-food giant saw outlets that had been open for over a year experience a sales fall of one percent – despite the introduction of money-off promotions to try and counter reduced customer footfall.
Boss Chris Kempczinski admitted to investors it was “clear that our value leadership gap (over rivals) has recently shrunk”.
Falling demand in China, the war in the Middle East and Europe, the rising costs of paper, food, and staff by as much as 40 percent, and the industry-wide fall in customers of up to two percent amid rising inflation pressures have all come together to hit the McDonalds bottom line.
The balance sheet has been further hindered by boycotts of stores, particularly by younger customers due to its perceived support of Israel following an announcement last year by McDonalds Israel that it would offer free meals to those fighting for the Israel Defence Forces (IDF) in Gaza.
McDonalds has recently taken over the Israeli franchise following the controversy.
The company is not alone in facing boycott calls over perceived support for Israel with brands such as Starbucks also coming into the firing line since October 7.
Mr Kempczinski told investors the brand has work to do to regain its reputation for value as he admitted that price increases to combat inflation had led customers to “reconsider their buying habits”.
The figures released yesterday show total revenue for the period remained flat year on year at $6.5billion (£5billion), while net income fell by 12 percent to $2billion (£1.56billion).
Mr Kempczinski outlined a plan to extend discounts to combat declining sales, vowing to work with franchises over the coming months to outline efforts to do so.
In the UK, this could include new product lines and meal deals in addition to an existing promotion that allows diners to select three items for £3, in a bid to entice customers back into their stores.