opinion
McDonald's CEO spoke out this week to admit that the brand's sales have taken a hit because high menu prices have alienated core customers.
McDonald's CEO speaks
The New York Post reported that McDonald's global same-store sales last quarter grew just 3.4%, less than the expected 4.7% growth.
“I think what you'll see as we head into 2024 is probably more interest in what I would describe as affordability,” McDonald's CEO Chris Kempczinski said, adding that low-income customers with incomes of less than $45,000 a year have stopped… Very much on demand. From McDonald's.
“Eating at home has become more affordable for everyone,” Kempczinski explained. “The battleground is definitely with that lower-income consumer.”
McDonald's wants to win back customers
McDonald's is now hoping to win back customers through marketing focused on low-cost options.
“We certainly know that consumers are more cautious – and concerned – about pricing and we will continue to be consumer-led in our pricing decisions as we look to 2024,” said CFO Ian Borden.
Restaurant analyst Mark Kalinowski warns that despite the backlash, price breakouts at McDonald's are likely to continue, albeit at a slower pace of 2% to 3% versus 10% last year.
“App discounts will be a big part of their arsenal,” Kalinowski said.
Following Kempczinski's comments, McDonald's shares fell nearly 4% on the New York Stock Exchange at the close, ABC News reported.
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McDonald's controversy in Israel
Last October, customers in the Middle East were outraged after McDonald's Israel announced it would provide free meals to Israeli soldiers. Some franchises such as McDonald's Amman responded by announcing donations to relief efforts in Gaza. In the months that followed, sales declined in Muslim-majority countries such as Malaysia and Indonesia, as well as in countries with large Muslim populations such as France.
“As long as this conflict, this war, continues…we don’t expect to see any significant improvement in this matter,” Kempczinski said, according to Yahoo News. “It's a human tragedy, what's happening, and I think that affects brands like ours.”
“Many markets in the Middle East and some outside the region are seeing a significant business impact due to the war and associated misinformation affecting brands like McDonald's,” Kempczinski said last October.
“This is frustrating and baseless,” Kempczinski said, according to Fox Business. “In every country we operate in, including Muslim countries, McDonald's is proud to be represented by local owners who work tirelessly to serve and support their communities while employing thousands of their own. Connecting with the local community is the genius of the McDonald's system.
Drama: McDonald's faces possible boycott for providing free food to Israeli soldiers – Lebanese restaurant “destroyed”
Kempczinski went on to say that McDonald's stands “in solidarity with communities around the world, and we are living our purpose and values to the fullest during difficult times.”
He added: “Our hearts remain with the communities and families affected by the war in the Middle East.” “We abhor violence of any kind, stand firm against hate speech, and will always proudly open our doors to everyone. Whether it's the earthquake in Japan, or the tragedies that struck Morocco and Hawaii last year, our system is always there to provide support.
What do you think is happening to McDonald's? Let us know in the comments section.
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