McDonald's plans to step up deals, marketing to combat slower fast food traffic

McDonald’s plans to step up deals and value messaging to combat slowing sales.

The Chicago burger giant said inflation-weary customers are eating out less often in many big markets. In the first quarter, fast food traffic was flat or down in the U.S., Australia, Canada, Japan, the United Kingdom and Germany.

“The consumer is certainly being very discriminating in how they spend their dollar,” McDonald's President and CEO Chris Kempczinski said Tuesday during a conference call with investors. “It may be more pronounced with lower-income consumers, but its important to recognize that all income cohorts are seeking value.”

McDonald's said its same-store sales – or sales at stores open at least a year -- rose 1.9% worldwide in the January-March period. That was below Wall Street’s forecast of a 2.1% increase, according to analysts polled by FactSet.

McDonald's had warned investors that the exceptional growth it was seeing post-pandemic would likely slow this year. With grocery prices lower, many consumers are eating more meals at home. Still, the same-store sales increases the company posted in the first quarter were lower than the 3% to 4% McDonald's usually sees in a typical year.

In the U.S., same-store sales rose 2.5% in the first quarter, but that was largely due to price hikes carried over from last year.

Kempczinski checked his McDonald's app during the call and noted that there were multiple deals available in his area, including one Big Mac for 29 cents when you buy another. And Kempczinski said 90% of U.S. restaurants are offering meal bundles for $4 or less.

But Kempczinski said McDonald's needs a nationwide value message and marketing to back it up. In some areas, it's losing out to competitors on customers' perception of value and affordability, he said. Wendy's is currently offering free fries with the purchase of a medium burger, for example.

“There’s a lot of great value out there, but everyone else has a value message too,” Kempczinski said.

Things aren't looking much brighter overseas. In McDonald's international franchised markets, same-store sales fell 0.2% in the first quarter as customers in the Middle East and Muslim-majority markets like Indonesia and Malaysia boycotted McDonald's for its perceived support of Israel. It was the first time since 2020 that quarterly same-store sales have fallen in that segment.

The boycotts began in October, after McDonald’s Israeli franchisee announced it was providing free meals for Israeli troops involved in the war in Gaza. McDonald’s has tried to limit the fallout. In early April, the company said it was buying Alyonal Limited, its Israeli franchisee, and taking over the country's 225 restaurants. Financial terms of the deal weren't released.

Kempczinski said the impact of the boycotts doesn't seem to be worsening, and some of those markets are still seeing delivery demand. But McDonald's expects the boycotts to continue for the forseeable future.

“We’re not expecting to see any meaningful improvement in the impact on that until the war is over," he said.

McDonald's said its revenue rose 5% to $6.17 billion in the January-March period. That was in line with Wall Street's estimates.

Net income was up 7% to $1.93 billion. Earnings, adjusted for restructuring charges, were $2.70 per share. That was short of analysts' forecast of $2.72.

McDonald's shares were flat in morning trading Tuesday.

Customers have a meal at an McDonald's outlet in Shah Alam, Malaysia, Sunday, April 28, 2024. McDonald’s said higher U.S. sales in the first quarter helped it overcome weakness in the Middle East and other markets where consumers have been boycotting the brand over its perceived support for Israel. (AP Photo/Vincent Thian)

Customers have a meal around empty chairs at an McDonald's outlet in Shah Alam, Malaysia, Sunday, April 28, 2024. McDonald’s said higher U.S. sales in the first quarter helped it overcome weakness in the Middle East and other markets where consumers have been boycotting the brand over its perceived support for Israel. (AP Photo/Vincent Thian)

Customers place orders at a McDonald's restaurant at a shopping mall in Kuala Lumpur, Malaysia, Sunday, April 28, 2024. McDonald's releases its first quarter earnings Tuesday, April 30, 2024. (AP Photo/Vincent Thian)

FILE - McDonald's sign is seen in Wheeling, Ill., Thursday, March 14, 2024. McDonald's will report earnings on Tuesday, April 30, 2024 (AP Photo/Nam Y. Huh, File)

A former University of Arizona graduate student was convicted Tuesday of first-degree murder for fatally shooting a hydrology professor on campus, months after he was expelled.

A Pima County Superior Court jury deliberated for less than three hours before reaching a verdict against Murad Dervish, 48, in the death of Thomas Meixner, who was shot 11 times near his office in October 2022.

Dervish also was convicted of five other felony counts, including aggravated assault for a bullet that grazed a building manager. Dervish, who showed no emotion as the verdicts were read, is set to be sentenced on June 24. He could face life in prison.

Meixner, 52, headed the university’s Department of Hydrology and Atmospheric Sciences. Dervish was in the master’s degree program in atmospheric sciences.

Authorities said Dervish was banned from the school in January 2022 and later expelled for ongoing issues with professors after he received a bad grade.

Defense attorney Leo Masursky told jurors in his closing argument Monday that Dervish was having a psychotic episode during the shooting and that the crime wasn't premeditated.

He said jurors should hold Dervish accountable but urged them to consider a lesser charge of second-degree murder that could have meant confinement in a psychiatric hospital, rather than a prison cell.

“Murad Dervish lost his mind on Oct. 5, 2022,” Masursky said. “He had severe mental health issues. He did not know right from wrong.”

But Pima County prosecutor Mark Hotchkiss said evidence showed Dervish planned Meixner’s killing and bought — a 9 mm handgun — a month before the using it in the shooting.

“He is not guilty but insane. He's just guilty," Hotchkiss said of Dervish.

According to a criminal complaint, a flyer with a photograph of Dervish was circulated to university staff in February 2022 with instructions to call 911 if Dervish ever entered the John W. Harshbarger Building, where Meixner worked.

The complaint also said Dervish was barred from school property and was the subject of several reports of harassment and threats to staff members working at Harshbarger.

Witnesses testified that Dervish was wearing a surgical mask and baseball cap as a disguise when he showed up outside Meixner’s office and shot the professor.

Dervish fled the scene but was arrested three hours later after Arizona state troopers stopped his car on a highway more than 120 miles (190 kilometers) northwest of Tucson.

Authorities said a loaded handgun was found in the vehicle, and the ammunition was consistent with the shell casings found at the shooting scene.

This story has been corrected to show Dervish is not facing the death penalty.

FILE - Arizona graduate student Murad Dervish sits in Pima County Superior Court, May 8, 2024, in Tuscon, Ariz. Dervish, a former University of Arizona graduate student was convicted Tuesday, May 21, 2024, of first-degree murder for fatally shooting a hydrology professor on campus in 2022, months after his expulsion. (Mamta Popat/Arizona Daily Star via AP, File)