Earnings and Revenue Miss Estimates
McDonald’s reported adjusted earnings per share of $2.97, missing analysts’ expectations of $3.07. Revenue came in at $6.49 billion, short of the estimated $6.61 billion. This marks a decline in same-store sales across every division, with a 1% drop overall. In the U.S., same-store sales decreased by 0.7%, a stark contrast to the 10.3% growth seen in the same quarter last year.
Consumer Pullback Worsens
The company’s struggles can be attributed to a worsening consumer pullback, particularly in the fast-food sector. Consumers are becoming increasingly price-conscious, and McDonald’s is no longer seen as a good deal. Foot traffic to U.S. restaurants fell during the quarter, and the company is leaning into discounts to bring back diners. The recently launched $5 meal deal is a step in this direction.
International Markets Struggle
McDonald’s international operated markets division, which includes France and Germany, saw same-store sales slide 1.1%. The company’s international developmental licensed markets unit, which includes China and Japan, reported same-store sales declines of 1.3%. The brand is still dealing with the fallout from boycotts in the Middle East, and sales in China continue to struggle.
Stock Performance
Following the earnings report, McDonald’s stock fell due to the triple miss of profit, revenue, and comparable sales. This decline is a clear indication of the challenges the company faces in the current market.
Looking Ahead
In conclusion, McDonald’s Q2 2024 earnings report was a disappointment, with misses across the board. The company’s struggles are a reflection of the broader consumer pullback, and it’s essential for McDonald’s to address these challenges head-on to regain momentum in the market.
