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)

ROUEN, France (AP) — French police shot and killed a man armed with a knife and a metal bar who is suspected of having set fire to a synagogue in the Normandy city of Rouen early on Friday, the latest apparent act in a storm of antisemitism roiling France amid the Israel-Hamas war.

Officers were alerted early Friday morning that smoke was rising from the synagogue and came face to face with the man when they got there, the national police information service said. It said the man surged toward officers with a knife and a metal bar. An officer opened fire and fatally wounded the man, police said. Police said they had not yet identified the man.

Interior Minister Gerald Darmanin posted on the social media site X that the armed individual was “clearly wanting to set fire to the city’s synagogue.”

He congratulated officers for “their reactivity and their courage.”

Tensions and anger have grown in France over the Israel-Hamas war. Antisemitic acts have surged in the country, which has the largest Jewish and Muslim populations in western Europe.

Rouen Mayor Nicolas Mayer-Rossignol said the man is thought to have climbed onto a trash container and thrown “a sort of Molotov cocktail” inside the synagogue, starting a fire and causing “significant damage.”

“When the Jewish community is attacked, it's an attack on the national community, an attack on France, an attack on all French citizens," he said.

“It’s a fright for the whole nation,” he added.

Frédéric Desguerre, a regional police union official, told broadcaster BFM-TV that the man hurled the metal bar he was carrying at the officers and pulled out a long kitchen knife from one of his sleeves.

“He moved toward them with a determined air, quite violent,” he said.

Desguerre, of the Unité police union, said the officer fired five shots after warning the man to stop moving.

French Prime Minister Gabriel Attal said this month that the sharp spike in antisemitic acts in France that followed the Oct. 7 attack by Hamas on Israel has continued into this year.

Authorities registered 366 antisemitic acts in the first three months of 2024, a 300% increase over the same period last year, Attal said. More than 1,200 antisemitic acts were reported in the last three months of 2023 — which was three times more than in the whole of 2022, he said.

“We are witnessing an explosion of hatred,” he said.

Leicester reported from Paris.

French policemen stand the synagogue in Rouen, France, Friday, May 17, 2024. French police have shot and killed a man armed with a knife and a metal bar who is suspected of having set fire to a synagogue in the Normandy city of Rouen. (AP Photo/Oleg Cetinic)

A police car is parked in front of the synagogue in Rouen, France, Friday, May 17, 2024. French police have shot and killed a man armed with a knife and a metal bar who is suspected of having set fire to a synagogue in the Normandy city of Rouen. (AP Photo/Oleg Cetinic)