McDonald’s CEO Chris Kempczinski signaled that the fast-food giant will refocus on “affordability” this year amid customer pushback against jacked-up menu prices.
During a Monday morning earnings call, Kempczinski emphasized the need to draw back low-income diners turned off by $18 Big Mac combos—a backlash that, combined with rising minimum wage costs and an anti-McDonald’s boycott sparked by the Israel-Hamas war, has led to a rare quarterly downturn for the company.
According to McDonald’s fourth-quarter earnings report, the Chicago-based burger chain recorded its first sales miss in nearly four years. Global same-store sales in Q4 grew by 3.4 percent, missing the 4.7 percent mark Wall Street had anticipated. As a result of the company’s poor performance, shares slipped by 4 percent on the New York Stock Exchange.
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Speaking with analysts on the Monday earnings call, Kempczinski partly attributed the slump to a return to pre-COVID consumer patterns, framing the issue as a battle to win over consumers making less than $45,000 a year.
“What you’re going to see is more attention to affordability,” he said. “Think about that as an absolute price point, which is more important for that consumer to get them into the restaurants than maybe value messaging.”
According to Kempczinski’s assessment, consumers pummeled by inflation are suddenly finding it cheaper to eat at home thanks to slightly lower grocery store prices.
“Eating at home has become more affordable,” Kempczinski said. “The battleground is certainly with that low-income consumer.”
At the same time, rising restaurant prices are driving customers away from once-affordable options like McDonald’s. Over the summer, a Connecticut McDonald’s franchise went viral for offering a Big Mac combo meal (burger, fries, and drink) for a whopping $18 and a Quarter Pounder combo for $19. Similarly, another location was slammed last week for its $7 Egg McMuffins and $6 hashbrowns. Most of the growth expected for the chain in 2023 came almost entirely from increased menu prices.
However, another kind of backlash has also cut into McDonald’s quarterly earnings.
While most franchises around the world reported positive growth, locations in the Middle East, France, Malaysia, and Indonesia have experienced boycotts and protests stemming from the Israel-Hamas war. Following the October 7th attacks by Hamas, a local McDonald’s franchise in Israel offered members of the Israel Defense Force free meals, setting off a regional backlash that “meaningfully impacted” the overseas market.
“So long as this war is going on … we’re not expecting to see any significant improvement [in these markets],” Kempczinski said on the call.
Related: McWWIII – McDonald’s Locations Become Battlegrounds in Israel-Hamas War
Other factors that have eaten into McDonald’s quarterly growth include rising wages—particularly in California—and a record-high cost of maintaining a franchise.
Connor Walcott is a staff writer for Valuetainment.com. Follow Connor on X and look for him on VT’s “The Unusual Suspects.”
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