McDonald’s executives are taking steps to recapture consumers with deals and extend their $5 value meal platform after a challenging second quarter. U.S. President Joe Erlinger acknowledged that the company struggled to sell diners on affordability and expects industry and competitive challenges to persist throughout the year. He emphasized the importance of a long-term mindset for the company’s success in reversing the narrative and re-establishing their position as the leader on value and affordability.
The company reported lower-than-expected results in the second quarter, with same-store sales declining in all segments, including the key U.S. market. Erlinger highlighted areas where McDonald’s fell short, including negative same-store guest counts for the fourth consecutive quarter and declines in the number of items per transaction. They continue to lose traffic share of low-income consumers. However, he noted that trial rates for the value meal launch were highest among low-income consumers, and sentiment around McDonald’s value has started to improve.
To drive traffic back to restaurants, McDonald’s plans to extend its $5 value meal beyond the initial four-week window in most of its U.S. markets. In a memo to the U.S. system, executives stated that nearly every business unit, covering 93% of its restaurants, voted to extend the promotion. The majority of locations will extend through August or vote on whether to do so.
Erlinger hinted at upcoming decisions regarding extensions and future value offerings. Executives expressed confidence that franchisees in the U.S. are financially capable of investing in the value offering, and they are currently working with owners to assess its overall profitability. Erlinger emphasized the need to close the affordability gap and take actions that demonstrate to customers that McDonald’s is listening.
Looking ahead, McDonald’s has a solid plan for the second half of the year, but there are important decisions to be made that will set them up for competition and momentum in the final five months and into 2025. The company is focused on regaining its position as the leader in value and affordability, recognizing that it will require sustained and coordinated efforts to show customers that they are on their side.
Overall, McDonald’s is determined to reverse the narrative and regain its competitive edge in the fast-food industry. By extending the $5 value meal and addressing affordability concerns, they aim to attract more customers and improve their financial performance. With a long-term mindset and strategic decision-making, McDonald’s is confident in its ability to compete and build momentum for the future.
