McDonald's Latest Earnings Call Shows It's Actually Losing Customers

Inflation has continued to hit Americans hard since COVID-19 changed the world, even with the federal government closing in on its 2% inflation goal. McDonald's and other fast food restaurants used to be the quick, low-cost alternative to cooking at home. Now, a 10-piece McNugget meal can cost as much as a meal at a sit-down restaurant. What's worse, some McDonald's prices have actually increased by double or even triple the rate of inflation over the past decade.

Not only have people noticed this extreme price increase, but they're starting to make their frustration known. For the first time since the final quarter of 2020, McDonald's global sales have dropped a full percent, and U.S. sales are down .7% compared to this time last year. That hurts McDonald's stock price, too, falling almost 11% since August 2023 at the time of writing. McDonald's chairman and CEO Chris Kempczinski foresaw the drop, saying on a recent earnings call that "Beginning last year we warned of a more discriminating consumer, particularly among lower-income households" before continuing to note that "those pressures have deepened and broadened."

No corporation becomes as powerful and well-known as McDonald's without the ability to pivot during hard times. Its primary attempt to bring the people back is to introduce value menus, with the June introduction of its $5 Meal Deal being the most notable. That deal, which includes a McChicken or McDouble with fries, four McNuggets, and a drink, has sold "above expectations," according to McDonald's U.S. President Joe Erlinger. The franchise has even extended the deal through August.

However, Chris Kempczinski still noted, "It's clear that our value leadership gap has recently shrunk." A truth made most evident to consumers from the lack of $1 offerings on McDonald's "$1 $2 $3 Dollar Menu."

McDonald's is also putting extra focus on its chicken-based meals, especially with chicken and beef sales about equal. It also started testing a new burger called the Big Arch this summer in Canada, Germany, and Portugal. Should it not remain a much-craved international-only item and become a regular on the U.S. menu, it would become McDonald's biggest and most calorie-dense (1,065) burger. Or, maybe it'll go down with the rest of McDonald's forgotten experiments.