McDonald's Traffic Slumps Amid Franchisee Resistance to Price Algorithms
McDonald's is facing a challenging period as it grapples with declining customer traffic and resistance from franchisees to price algorithms. The stock has dropped 22 percent since the start of the year, hovering just above its 52-week low of 203.80 euros.
A key issue is footfall, with Citi analyst Jon Tower estimating a 4.6 percent decline in US customer traffic for the quarter. CFO Ian Borden has warned that comparable sales in the United States are likely to stay negative through the third quarter, while CEO Chris Kempczinski pointed to a double-digit percentage collapse in spending among lower-income diners over the past two years.
Franchisees are pushing back against price algorithms used across 14,000 US locations, which generate price recommendations based on local purchasing power and competitor data. According to Reuters, some franchisees feel mounting pressure to adopt these suggestions, despite claims that operators retain final say over menu prices.