Dive Brief:
- McDonald’s U.S. same-stores sales were up 0.3% during the third quarter, according to an earnings release.
- The comp sales results include average check growth that was partially offset by negative guest counts, the company said. Campaigns around value and core menu items alongside improvements to restaurant level execution and ongoing digital and delivery growth contributed to the slight increase.
- McDonald’s traffic likely improved when compared to Q2, even if guest counts were negative by its own metrics. According to Placer.ai data, the chain saw year-over-year visits rise 0.3% last quarter, compared to a 2.2% decline in the second quarter, when McDonald’s posted its first U.S. same-stores sales decline since 2020.
Dive Insight:
The QSR industry’s traffic remains under pressure as consumers, especially low-income households, have been eating at home more often, McDonald’s Chairman and CEO Chris Kempczinski said Tuesday in an earnings call.
“While we anticipated a challenging environment in 2024, our performance so far this year has fallen short of our expectations,” Kempczinski said.
Among the chain’s strategies to improve traffic and sales was the creation of a national value platform, versus its previous localized value offerings. It unveiled a $5 Meal Deal at the end of the second quarter and saw positive traffic in the days following its release. The value offering was extended through much of the rest of the year.
“[McDonald’s] U.S. outperformed the QSR industry comp sales and comp guest counts for the quarter,” Ian Borden, McDonald’s CFO, said on the Tuesday call. “This quarter’s comp guest count gap to [our closest] competitors was the highest since the first quarter of 2023.”
McDonald's U.S. same-store sales
These results were helped by marketing campaigns such as its Collector's Edition campaign, which launched in August and featured cups with images of brand keepsakes from McDonald’s own intellectual property, as well Coca-Cola, Mattel, Universal and Sanrio. That promotion “delivered a significant increase in average check for its two week run before selling out,” Borden said.
For the $5 Meal Deal, McDonald’s wanted to see three things, Borden said. First it wanted to improve the brand’s perception about value and affordability. Second, it wanted to connect with the single user, particularly lower-income consumers. Third, it wanted to see a shift in guest counts to improve both the short-term and long-term health of the business.
“The $5 Meal Deal has done just that, and continued drawing customers back into our restaurants throughout the quarter, maintaining an average check north of $10 and being profitable for our franchisees,” Borden said.
The chain saw increased traction among low-income consumers and grew traffic for this demographic for the first time in over a year, he said. Customers buying the $5 Meal Deal increased their frequency, Borden said.
“[McDonald’s] … is solidifying details behind the future U.S. value platform, working together with our franchisees to get it right for our customers by blending the best thinking form around the world as well as our own history in the U.S.,” Borden said, adding that the chain expects to introduce a more holistic value platform in Q1 2025.
While executives did not share specifics regarding the forthcoming value platform, Kempczinski said it will include everyday affordable pricing, a meal deal component and some digital offers. He pointed to some international platforms like McSmart, which is a branded value platform in Germany offering meals at various price points.
Alongside providing more value offerings, the chain has also been focused on better execution at the restaurant level. That push included running competitions aimed at increasing guest counts, improving the speed of service and refining its digital execution, Borden said.
“And it worked,” Borden said. “U.S. customer satisfaction scores reached an all-time high, and service times at the drive-thru have dropped by double-digits compared to last year.”
Despite gaining positive momentum through the third quarter and into the fourth quarter, the chain did see a decline in traffic in the wake of the E. coli outbreak tied to slivered onions in its Quarter Pounders That outbreak, which dominated the news much of last week, sickened at least 75 people and killed one individual. The burger will return to 900 impacted restaurants this week and the outbreak is largely contained, executives said, but the chain will have to work on regaining traffic momentum through the rest of the year.
