McDonald’s reported weaker-than-expected quarterly revenue overnight, as its United States same-store sales saw the steepest drop since the pandemic, weighed down by reduced customer spending and the impact of an E. coli outbreak.
The fast-food giant reported earnings per share of $2.83, slightly below the anticipated $2.84, while revenues came in at US$6.39 billion, missing expectations of $6.45 billion.
Despite the revenue shortfall, McDonald's shares rose 4.8% as executives projected sales recovery in 2025.
Same-store sales in McDonald's U.S. segment fell 1.4% in the quarter, reflecting reduced consumer spending and the fallout from the E. coli outbreak linked to the company’s Quarter Pounder burgers.
The Centers for Disease Control and Prevention (CDC) connected the incident to the chain’s slivered onions, leading McDonald's to switch suppliers. While traffic remained slightly positive, average customer spending declined.
The worst of the sales downturn occurred in early November, particularly in the affected states. However, demand began recovering later in the quarter. Chairman and Chief Executive Officer Chris Kempczinski noted that the outbreak's impact is now largely confined to the Rocky Mountain region, where the issue was most pronounced.
To regain momentum, McDonald’s plans to introduce new value deals and menu additions, including the return of snack wraps and the launch of a new chicken strip product in 2025.
While U.S. sales struggled, McDonald's' international markets showed resilience. The international developmental licensed markets segment, covering regions like the Middle East and Japan, reported same-store sales growth of 4.1%.
Meanwhile, the internationally operated markets division, which includes key countries such as the U.K. and France, saw a 0.1% increase in same-store sales. France, in particular, rebounded after months of weak demand.
McDonald's CFO Ian Borden expects Q1 2025 to be the lowest point for same-store sales, citing a sluggish U.S. start, winter storms, and California wildfires. Despite these challenges, McDonald's remains committed to growth, planning to open 2,200 new restaurants this year, with around 1,000 in China.
Capital expenditures are projected between $3 billion and $3.2 billion, while foreign currency fluctuations are expected to reduce full-year earnings per share by $0.20 to $0.30.
Chairman and CEO Chris Kempczinski noted, “Accelerating the Arches continues to be the right strategy as we focus on growing market share.
“We’re playing to win, focusing on our customers with outstanding value, exciting menu innovation and culturally relevant marketing.”
At the time of writing, McDonald’s (NYSE: MCD) stock was trading at US$308.65, up 4.8% from Friday's close of $294.30. The stock reached a day low of $301.51 and a day high of $310.28. McDonald’s market cap stands at $221.08 billion.
