Last quarter, McDonald's marketing promotions such as WcDonald's contributed to sales growth. | Image courtesy of McDonald's.
Chicago-based fast-food giant McDonald's posted first-quarter U.S. same-store sales of 2.5 as digital, delivery, marketing and operations all boosted sales in the first three months of 2024. % increase, it announced on Tuesday.
However, the company said those sales were driven by “strategic menu price increases.” McDonald's and other fast food chains have increased sales primarily by raising prices in response to rising costs.
Still, this marks the 15th consecutive quarter of U.S. same-store sales growth for McDonald's. Globally, same-store sales increased 1.9% during the same period, marking the 13th consecutive quarterly increase.
McDonald's sales on a two-year “build-up” basis increased by 15.1%, a slight acceleration from the 14.6% increase in the two-year period in the fourth quarter.
“As consumers become more discerning with their spending, we're committed to delivering first-class, trusted, everyday value and exceptional performance in our restaurants,” CEO Chris Kempczinski said in a statement. By doing so, we hope to continue to attract more customers.”
The company's revenue for the quarter rose 5% to $6.17 billion. Net income increased 7% to $1.9 billion, or $2.66 per share. This matched Wall Street's sales expectations, but fell short of earnings.
Same-store sales increased 2.7% in the company's international operating markets, which feature the most developed markets such as Canada, Australia and the United Kingdom, but decreased 0.2% in the company's developing markets, primarily in the Middle East. This was brought about by the slump in the situation. Due to the Gaza conflict.
Back in the United States, McDonald's was able to generate sales through marketing, which greatly strengthened the company's sales force from the pandemic. The company's promotion of the animated “WcDonald's” seemed to be a success.
The company also made improvements to its cheeseburger, McDouble and Big Mac mini-hamburgers known as the “Best Burger,” which are now used in about 80% of restaurants worldwide. McDonald's also credits operational improvements for driving business forward during this period.
Digital also boosted sales, particularly for members of its loyalty program, MyMcDonald's Rewards. Loyalty members have used the loyalty program to generate more than $6 billion in sales for the company and its franchisees in 50 markets worldwide. The company says sales to loyalty members in these markets reached nearly $25 billion in the past 12 months.
Overall, systemwide sales increased 3%. This reflects higher same-store sales and higher unit sales. McDonald's has focused on expanding sales around the world, including the United States, believing that sales growth justifies increasing the number of stores.
But the key issue for the company may be about consumer value. Prices at McDonald's and other fast food restaurants have soared over the past two years, leaving many consumers questioning the chain's value.
As a result, restaurant chains are losing foot traffic to grocery and convenience stores. McDonald's executives have increased their focus on the topic in recent months amid concerns about the condition of consumers, especially those in low-income households.
“Eating at home has become much more affordable,” Kempczinski told analysts in February, explaining the drop in traffic from low-income people.
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