McDonald's Rent Stream Stays Strong as Same-Store Sales Slow
McDonald's recently reported a slowdown in US same-store sales growth to just 0.8% for the second quarter, citing its own execution as the reason.
CEO Chris Kempczinski attributed the shortfall to changing traffic patterns within the restaurant industry, with diners becoming more value-conscious. McDonald's had been raising prices to offset inflation but saw lower-income customers pulling back since last fall.
The company responded by relaunching Extra Value Meals and expanding its value platform with a new under-$3 menu and $4 breakfast meal deal in April. However, this rollout gave operators too much leeway, leading a third of franchisees to price items higher than intended.
McDonald's also pulled back on digital offers and removed the Buy One, Add One for $1 deal that loyal customers relied on. The combination was described by Kempczinski as 'a bad trade.'