McDonald's US Sales Growth Misses Estimates as Low-Income Consumers Cut Spending

McDonald's Corp. on Tuesday reported second-quarter sales growth in its U.S. market that missed Wall Street estimates, a sign that its value-oriented promotions are not fully resonating with lower-income consumers who are cutting back on restaurant spending.

Key Figures and Market Reaction

The fast-food giant said comparable sales in the United States, its largest market, grew by 0.8% in the second quarter. This performance fell short of the 1.06% rise analysts had forecast, according to LSEG data, and marks a significant deceleration from the 2.5% growth recorded in the same period a year ago.

Despite the domestic sales slowdown, the company's adjusted earnings per share (EPS) came in at $3.38, beating the average analyst estimate of $3.32. Following the announcement, McDonald's shares, which have declined nearly 13% this year, rose approximately 1.4% in premarket trading.

Consumer Pressures and Strategy

The results highlight the impact of persistent economic concerns on McDonald's core customer base. Higher costs for essential goods have squeezed the budgets of lower-income households, leading to reduced discretionary spending on eating out. This trend has blunted the effectiveness of the company's recent promotional efforts, which include a revamped McValue platform and an under-$3 menu.

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"While our playbook is working around the world, we see an opportunity to raise the bar in the U.S. and accelerate performance in our largest market," said CEO Chris Kempczinski in a statement. The company also faced difficult year-over-year comparisons against successful promotions from the prior year.

Global Performance and Outlook

Globally, McDonald's saw comparable sales rise by 1.3%, a slowdown from the 3.8% growth posted a year earlier. The international operated markets segment, which includes major European nations, also saw growth slow to 1.5% from 4% a year ago, as higher energy costs and challenging weather conditions reportedly curbed consumer spending.

In a move to address the underperformance, McDonald's announced it has appointed company insider Skye Anderson to lead its U.S. business and spearhead the effort to regain momentum.