On July 6, 2024, McDonald’s fast food restaurant in Manhattan, New York.
Beata Zaouzel | Photos of Beata Zaouzernur | Getty Images
After a challenging second quarter, McDonald’s Executives told restaurant operators and analysts that while pushing to extend the offer, they are refocusing on how to re-engage consumers through deals. Its $5 value dining platform.
In a memo to the U.S. system obtained by CNBC on Monday, the company’s U.S. president, Joe Erlinger, said McDonald’s would struggle to market affordable products to diners, adding that he expected “the industry and competitive challenges” will continue throughout the year. Ellinger Operators are encouraged to look ahead to next year to build momentum for next year, adding that “cultivating a long-term mindset is critical to a company’s success.”
“It is possible to turn around the situation and re-establish our position as a leader in value and affordability, but it cannot happen overnight,” he wrote. “This will be achieved through sustained and coordinated action to show customers that we stand On their side.”
The company reported results on Monday that missed analysts’ expectations for both revenue and profit. Same-store sales fell across all segments, including its major segments U.S. markets fell 0.7%. The company had forecast a challenging last quarter and its shares rose on Monday on the results.
Ehlinger also acknowledged that the company “fell short” in some areas in the United States this quarter. He noted that same-store customer numbers were negative for the fourth consecutive quarter and the number of items per transaction fell to average levels.
“We continue to lose traffic share to lower-income consumers,” he wrote. But he added that trial of the value meal was highest among low-income consumers, and that perceptions of McDonald’s value had begun to improve.
company will extend its $5 value meals after the initial four weeks The fast-food giant says the offer is driving traffic back to its restaurants. In a memo to the US system obtained by CNBC last week, executives wrote that nearly all business units, including 93% of restaurants, voted to extend the promotion beyond its original end date at the end of this month. Most locations will extend through August or plan to vote on whether to do so, the memo said.
Ehlinger appeared to hint at upcoming decisions on extensions and future value products in Monday’s memo. Executives said on the conference call that U.S. franchisees are in a good financial position to invest in the value product and they are now working with owners to assess their overall profitability.
“Value and affordability have been part of our DNA since we first opened, but we also need to close the affordability gap, and we must continue to take action to show our customers that we are listening… we must continue to take action,” Ellinger wrote in the memo. We already have a solid plan for the second half of the year, but there are several important decisions ahead that will allow us to compete and build even greater momentum in the final five months and into 2025.
McDonald’s did not immediately respond to CNBC’s request for comment.
