McDonald’s reported a drop in profits Monday behind broad-based sales declines as the fast food giant redoubles efforts to win over inflation-weary consumers.
All three of the chain’s operating regions experienced comparable sales decline, a significant weakening next to the year-ago results when global comparable sales jumped nearly nine percent.
Profits for the quarter ending June 30 were $2.0 billion, down 12 percent.
Revenues were essentially flat at $6.5 billion.
In the home market of the United States, McDonald’s experienced a drop in guest counts, although results were bolstered somewhat by digital and delivery growth.
The company’s press release cited France as a driver of negative results in its international operated markets, while international developmental licensed markets were hit by negative results in China and the drag from the Middle Eastern war.
McDonald’s in June kicked off a $5 meal promotion in the United States that includes a sandwich, small fries, a small soft drink and a four-piece Chicken McNuggets package.
The summer offering is a pitch to inflation-weary consumers to “help your dollar go further,” said a June 20 company announcement for a program that has reportedly been extended into August.
Shares of McDonald’s rose 0.7 percent in pre-market trading.
Looking at McDonald’s peers in the restaurants segment, some have already reported their Q2 results, giving us a hint as to what we can expect. Domino’s delivered year-on-year revenue growth of 7.1%, meeting analysts’ expectations, and BJ’s reported flat revenue, in line with consensus estimates. Domino’s traded down 14.6% following the results while BJ’s was also down 15.4%.
Investors in the restaurants segment have had steady hands going into earnings, with share prices flat over the last month. McDonald’s stock price was unchanged during the same time and is heading into earnings with an average analyst price target of $301.8 (compared to the current share price of $251.18).
By Agencies
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