He said the average price of a Big Mac in the US, which is now $5.29 (\u00a34.11), was up 21% since 2019 – roughly in line with the pace of inflation – and many items had risen by less.<\/p>\n<\/div>\n
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But on the call with investors, Mr Kempczinski conceded the company had work to do to reclaim its reputation for value. <\/p>\n
Price increases, made in response to inflation, had “led consumers to reconsider their buying habits”, Mr Kempczinski admitted.<\/p>\n
Though some markets have been able to adjust, in others, “a more comprehensive rethink has been required”, he said. <\/p>\n
McDonald’s has increased prices on key items faster than its peers, said Bank of America analyst Sara Senatore.<\/p>\n
“Consumers are savvy, aware of that,” she said. “The $5 meal that they have launched may be starting to change perceptions, but we are not seeing a trend change yet in terms of transactions and that’s what they’re going to need to see.”<\/p>\n
McDonald’s is the latest corporate giant to warn of slower consumer spending, including in major economies such as China.<\/p>\n
The company said overall revenue, which includes sales at newly opened stores, was flat year-on-year. Profits slipped 12%. <\/p>\n
McDonald’s said lower income customers were particularly hurting and the loss of those buyers was not being made up by wealthier households trading down.<\/p>\n
Demand at its restaurants fell in the US, the company said, while weakness in France and price wars in China also weighed on sales.<\/p>\n
France is among the countries where the brand has been caught up in boycott calls sparked by Israel’s war in Gaza. Other US companies, including Starbucks, have also been affected. <\/p>\n
“Consumers are being more discerning about where, when and what they eat, and I would say we don’t expect significant changes in that environment for the next few quarters,” a McDonald’s executive said on the call.<\/p>\n<\/div>\n
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