McDonald’s misses U.S. sales growth target as consumer spending tightens

A McDonald's logo is shown at a restaurant in Warren, Mich. (AP Photo/Paul Sancya, file)

McDonald’s missed Wall Street estimates for growth in quarterly U.S. comparable sales on Thursday, as low-priced meal deals and limited-time offers struggled to draw diners whose budgets have been strained by higher fuel and grocery costs.

After several years of price hikes, operators in the fast-food industry have been forced to rely more on value-driven promotions to revive demand as customers cut back spending.

The world’s biggest burger chain posted U.S. same‑store sales growth of 3.9 per cent in the first quarter, missing expectations of a 4.2 per cent increase.

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CEO Chris Kempczinski said the operating environment remained “challenging,” even though McDonald’s beat quarterly estimates for revenue and profit, sending its shares up about three per cent in premarket trading.

Several U.S. restaurant chains such as Wingstop and Domino’s have reported weaker quarterly sales growth, citing a hit to customer spending from soaring gasoline prices caused by the Iran war.

Lower-income consumers are becoming more selective, Wall Street analysts have said, increasingly trading down to simpler, single‑item orders rather than full meals.

McDonald’s U.S. traffic remained uneven through the first quarter, data from Placer.ai showed.

Same-store visits fell 1.3 per cent in January due to winter storms. Traffic rebounded 3.8 per cent in February on pent‑up demand, but slipped in March to 1.2 per cent in a more muted response to new menu launches as rising fuel prices further hurt household budgets.

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To capture cost-conscious customers, McDonald’s has expanded its McValue platform with new US$3 and $4 tiers in April.

Globally, McDonald’s comparable sales rose 3.8 per cent, narrowly missing analysts’ average expectation of 3.95 per cent, though it was an improvement from a one per cent decline a year ago.

The company’s total revenue of $6.52 billion exceeded estimates of $6.47 billion, according to data compiled by LSEG. On an adjusted basis, it earned $2.83 per share, beating expectations of $2.74.

(Reporting by Savyata Mishra in Bengaluru; Editing by Arun Koyyur)