McDonald's Q2 Sales Disappoint, Franchise Model Delays Systemwide Changes

McDonald's reported disappointing US same-store sales growth of 0.8% in Q2, falling short of expectations. The company attributed the shortfall to its own execution issues, and CEO Chris Kempczinski acknowledged that lower-income diners had been pulling back for a couple of years due to increased prices.

The value proposition didn't resonate with customers as McDonald's relaunched Extra Value Meals, which initially drove a recovery in Q1. However, the rollout gave franchisees too much leeway, leading them to price items higher than intended, and the company pulled back on digital offers, removing the Buy One, Add One for $1 deal that loyal customers relied on.

Kempczinski called this combination 'a bad trade.' Traffic fell in Q2, with US comps slightly negative in July. McDonald's pushed its 50,000-restaurant target back to 2028 due to the consumer backdrop and higher development costs.