McDonald’s (MCD) is struggling to recover from a challenging 2024, despite recent efforts to win back customers.
In the fast-food chain’s fourth-quarter earnings report for 2024, it revealed that while its global comparable sales increased by 0.4% year-over-year during the quarter, its U.S. comparable sales shrunk by 1.4%. This contributed to McDonald’s facing flat consolidated revenues during the fourth quarter.
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In the report, McDonald’s claims that despite facing “slightly positive” foot traffic inside its U.S. restaurants, the decline in comparable sales reflects a decline in the amount of money consumers are choosing to spend inside its stores.
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The quarterly sales result is the worst McDonald’s has faced since the second quarter of 2020.
McDonald’s CEO reveals what caused sales to fall
The shrinkage in U.S. sales comes after McDonald’s battled an unsettling E. coli outbreak in October that affected multiple restaurant locations across the country.
The outbreak sickened more than 100 people, hospitalized 34, and even killed one person. It was the first serious public health issue McDonald’s had faced at its U.S. restaurants in more than 40 years.
The outbreak was linked to McDonald’s Quarter Pounder, and as a result, the fast-food chain temporarily removed the sandwich from its menus nationwide.
Data from Placer.ai revealed that McDonald’s restaurant visits declined by 6.4% year-over-year on Oct. 23, which is when the E. coli outbreak was announced. By Oct. 24, visits shrunk by 9.1%, and on Oct. 25, it decreased by 9.4%.
A double quarter pounder with cheese, fries, and a drink arranged at a McDonald’s restaurant in El Sobrante, California, US, on Wednesday, Oct. 23, 2024.
During an earnings call on Feb. 10, McDonald’s CEO Chris Kempczinski revealed that the outbreak had a negative impact on Quarter Pounder sales during the fourth quarter.
He also said that while the food safety issue is “now largely behind us,” the company expects to make a full recovery from the aftermath of it by the beginning of the second quarter of 2025.
“I think, right now, what we’re seeing is that the E. coli impact is now just localized to the areas that had the biggest impact,” said Kempczinski.
McDonald’s is still struggling to win back a major group of customers
McDonald’s recent dip in sales also comes after the fast-food chain unveiled its $5 Meal Deal in June 2024 in an effort to attract frugal customers. The deal offers a meal that consists of a McChicken, four-piece chicken nuggets or a McDouble, along with fries and a drink for $5.
McDonald’s rolled out the deal after it faced backlash from consumers on social media for hiking its menu prices during a time when inflation and the cost of living is high.
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A survey from LendingTree in May last year even revealed that roughly 78% of consumers view fast-food as a luxury. Also, 62% of Americans said they eat less fast-food due to high prices, and 56% said they choose to make food at home when they want an easy and cheap meal.
Kempczinski said during the call that the amount of low-income consumers visiting the fast-food chain’s U.S. restaurants was “still down double digits” during the fourth quarter.
However, he said that the $5 meal deal is encouraging customers to make other purchases as the average amount of money visitors are spending on the deal is above $10.
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“It’s doing what we were hoping for when we launched that,” said Kempczinski.
After facing an E. coli outbreak and criticism over high menu prices, McDonald’s has been doubling down on emphasizing value and affordability at its restaurants in an effort to win back customers.
On Jan. 7, the fast-food chain officially released its new “McValue” menu which offers its $5 Meal Deal and its brand-new “Buy One, Add One for $1” deal. The McValue menu contains breakfast, lunch and dinner items such as hash browns, 6-piece. Chicken McNuggets, Sausage McMuffin, a double cheeseburger, etc.
McDonald’s also recently announced that its popular Snack Wrap, which is basically chicken tenders, lettuce, shredded cheddar cheese and ranch that’s wrapped in a soft flour tortilla, will be returning sometime this year.
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