Budget-conscious Americans are coming back McDonald’s as the fast food giant doubles down on value-for-money meals, discounted packages and limited-time promotions aimed at stretching diners’ dollars.
The strategy appears to be working as U.S. sales rose 6.8% in the fourth quarter – the biggest increase in about two years – and low-price deals and aggressive promotions drove traffic back to that country. restaurants. Analysts had expected a more modest gain of 4.9%.
McDonald’s CEO Chris Kempczinski said there was growing evidence that the company’s value strategy was working, particularly among low-income consumers who have been hardest hit by the crisis. inflation.
A McDonald’s restaurant in San Francisco on July 29, 2024. (David Paul Morris/Bloomberg via Getty Images)
Holiday promotions also played a role in attracting customers. Last December, McDonald’s launched a Grinch-themed meal that the company said resulted in “the highest sales day in history.”
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The company relaunched its Monopoly promotion in October after nearly a decade and launched value offers starting at $5 in November.
Industry analysts say consistency will be key as consumers remain selective about where they spend.
McDonald’s strategy is remarkable considering how many American restaurants in the United States are struggling to maintain customer traffic. Across the industry, low-cost chains generally fare better than their higher-priced competitors as consumers shop down.
McDonald’s U.S. sales rose 6.8% in the fourth quarter, the biggest increase in about two years. (Mario Tama/Getty Images)
Taco Bell reported a 7% increase in same-store sales last quarter and KFC reported 3% growth, parent company Yum Brands said last week. Meanwhile, more expensive Chipotle Mexican Grill reported a 1.7% drop in sales earlier this month.
Renewed customer momentum helped drive stronger-than-expected financial results, highlighting how discount-driven traffic can translate into profits.
Exterior view of a McDonald’s restaurant on May 24, 2024. (Paul Weaver/SOPA Images/LightRocket)
The rebound in traffic translated into better financial results. McDonald’s global comparable sales rose 5.7% in the fourth quarter, beating expectations, while adjusted profit beat Wall Street estimates as revenue soared to more than $7 billion. International markets also contributed to growth, with sustained demand in Britain, Germany and Australia.
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Going forward, McDonald’s plans to build on its message of affordability while expanding into beverages such as cold brew coffees, craft sodas and energy drinks — offerings designed to drive additional visits, particularly among younger consumers. A new range of McCafe-branded drinks is set to roll out in the US and select international markets this year after a 500-store test exceeded expectations.
Reuters contributed to this report.