McDonald’s Reported Q2 Earnings Missed Estimates

McDonald’s has revealed its Q2 earnings, and the results show that the fast-food giant missed estimates across the board.

McDonald’s Q2 Earnings

According to Yahoo! Finance, McDonald’s consumers are once again tightening their belts in Q2 due to financial difficulties.

The firm released Q2 numbers on Monday morning, July 29, and they fell short of Wall Street projections in terms of revenue, earnings, and same-store sales. This shows that even the biggest fast-food chain in America is not immune to the difficult macroeconomic environment.

McDonald’s reported revenue of $6.49 billion for the quarter that ended on June 30, which was 2.01% higher than last year but lower than the company’s projected revenue of $6.63 billion. Moreover, adjusted earnings of $2.97 missed the $3.07 consensus estimate, according to Bloomberg consensus data.

In contrast to projections of a 0.84% increase, global same-store sales — which include both company-owned locations and franchisees — dropped 1%. This represents the first quarterly decrease in that measure since the COVID-19 shutdowns in Q4 2020.

In the results statement, CEO Chris Kempczinski stated, “Consumers are more discriminating with their spend.” According to him, the group’s main priorities are “accelerating strategic growth drivers like chicken and loyalty” and “outstanding execution” of delivering “reliable everyday value.”

In Q2, fast-food chains launched a series of short-lived package offers to make up for years of pricing increases. McDonald’s has declared that it will continue to offer its $5 meal deal through August. On June 25, the agreement went into effect near the end of the quarter.

Same-store sales in the U.S. fell 0.7% as a result of a decline in foot traffic. In 16 quarters, this is the first U.S. same-store sales drop. Increases in menu prices somewhat countered that. A silver lining in a dismal quarter was the positive rise in digital and delivery.

1.1% less was made in internationally owned shops due to negative sales growth “across a number of markets,” with France being the main driver.

“Consumers still recognize us as the value leader versus our key competitors, but it’s clear that our value leadership gap has recently shrunk. We are working to fix that with pace,” Kempczinski said on the earnings call.

Value Meals Haven’t Improved Earnings…Yet

While the company hasn’t seen any earnings improvements from Value Meals, the company has expanded the promotion to August, hoping for a Q3 improvement.

For TheStreet, BTIG analyst Peter Saleh examined several franchise checks for the massive burger chain and found that patrons weren’t exactly swarming the eateries.

In a statement seen by Seeking Alpha, he stated, “We note that comparisons ease in July, with the current month impacted by the timing of the July 4th holiday and Hurricane Beryl in Texas.”

In response to growing costs, 62% of Americans, as per a LendingTree survey, claim they are consuming less fast food. Furthermore, it appears from Saleh’s data that they aren’t quite in the mood to take advantage of McDonald’s temporary specials just yet.

Placer.ai’s research, however, yielded quite different findings. The launch Tuesday, June 25, was McDonald’s busiest Tuesday of the year thus far (outpaced since by July 2), generating 8.0% more visits than the Tuesday average for the year, according to the business, which tracks foot traffic at restaurants and retailers. And comparable trends persisted for every day after the introduction, indicating how well-liked this special was by McDonald’s devotees.