McDonald’s reported its first global sales decline in more than three years as consumers increasingly sought cheaper options and ate out less.
The fast-food chain said on Monday that it was the first decline since the final quarter of 2020, when the COVID-19 pandemic and government restrictions shuttered businesses and left millions of people homeless.
The global building permit business, run by licensees, suffered further declines, with sales down 1.3%, due to weakness among consumers in China and protests in the Middle East over fast food’s support for Israel.
McDonald’s Chief Executive Chris Kempczinski said consumers were cautious about spending after the company had previously benefited from people being “lured” to fast food by expensive restaurants.
“You see lower-income people often abandoning the grocery store, eating at home and finding other ways to save money.”
Kempczinski said consumers still consider McDonald’s the most popular fast-food restaurant. But its “value lead” over its rivals has narrowed. Sales of the $5 meal plan, which launched last month, have exceeded expectations, and the promotion, which will continue in many U.S. stores through August, are showing growth.
It won’t happen overnight, but it will. The stock market is looking to hold its own.