McDonald's Admits 'Bad Trade' on Value Menu Amid Q2 Earnings Disappointment
McDonald's recent Q2 earnings report revealed a mixed bag of results. The company beat adjusted EPS estimates by 1.77%, posting $3.38 per share, but revenue fell short of expectations at $7.099 billion.
The main culprit behind the disappointing quarter was a 'bad trade' made by CEO Chris Kempczinski. In April, McDonald's introduced an Every Day Affordable Price menu with items under $3, which involved pulling back on digital offers and discontinuing its Buy One, Add One for $1 promotion. However, this move backfired, resulting in roughly two-thirds of the quarter's traffic underperformance.
The company also acknowledged execution problems beyond pricing, including a dense stretch of rollouts that restaurant crews struggled to keep up with. Kempczinski noted that only 60% to 65% of the system executed the recommended EDAP pricing architecture as designed, leading to inconsistent results and weak awareness of the new menu.
In response, McDonald's named Skye Anderson President of McDonald's USA effective immediately, replacing Joe Erlinger after nearly seven years. Anderson's task is to fix the value trade, tighten the promotional calendar, and restore digital engagement with lapsed loyal customers.