Latest updated July 29, 2024 by

McDonald’s Sales Stall For First Time Since 2020 As Customers Ditch Chain Over Price Increases

McDonald’s is facing significant setback for the first time in three years, as the most recent earnings report says profits plummetted by 12%. This decline is in contrast to the company’s previous performance, which saw consistent growth fueled by the…

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McDonald’s is facing significant setback for the first time in three years, as the most recent earnings report says profits plummetted by 12%. This decline is in contrast to the company’s previous performance, which saw consistent growth fueled by the pandemic-era surge in fast food consumption.  

The primary culprit behind this downturn is a shift in consumer behavior. As inflation continues to bite, customers are becoming increasingly price-sensitive. While McDonald’s has long been a value-oriented option, recent price increases have eroded this perception. And now fewer customers are opting out of the Golden Arches, instead preparing meals at home or seeking cheaper alternatives.

The price increases find the chain (and many others) at new heights which has led to customer’s questioning why they should even be visiting the Ronald house. Customer’s have done the math, and are now opting for a sit-down restaurant or a mom and pop shop where the quality is better, and in some cases cheaper.

Edward Jones analyst Brian Yarbrough:The biggest hit for McDonald’s is the low-income consumer has really cut back on visits and that is more than offsetting the typical trade down McD normally sees in tougher economic times.”

The United States, a key market for McDonald’s, was particularly impacted by this trend. Same-store sales in the U.S. dipped nearly 1%, signaling a decline in customer foot traffic.

McDonald’s is being forced to reassess its strategy. One of those ways is by offering value meal options. The introduction of the $5 Meal Deal on June 25th proved to be such a success that it has been extended through August. 93% of McDonald’s locations across the US will continue to participate in the promo which has led to more traffic for the restaurant in all of 2024.

Will leaning into value, the strategy that originally put McDonald’s on the map, be enough to bring customers back on board? Let us know in the comments!

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