Business Americans keep turning their backs on McDonald’s

https://www.cnn.com/2024/07/29/investing/mcdonalds-earnings/index.html

https://lite.cnn.com/2024/07/29/investing/mcdonalds-earnings/index.html

https://archive.ph/MYo0t

By David Goldman, CNN
Mon July 29, 2024


McDonald’s, Starbucks, Burger King, Wendy’s and other rivals are reporting less foot traffic and lower overall sales as consumers pull back their spending on food away from home.

Inflation has caught up with McDonald’s, and budget-conscious Americans are looking elsewhere for their fast-food fix. But McDonald’s believes it has a solution: Value meals.

McDonald’s on Monday reported that sales at US stores open at least a year fell 0.7% last quarter from the same period a year earlier, dragged down by fewer customers going to the fast-food company’s restaurants. McDonald’s isn’t alone: Starbucks, Burger King, Wendy’s and other rivals are also reporting less foot traffic and lower overall sales as consumers pull back their spending on food away from home.

The tough environment for McDonald’s wasn’t limited to the United States: Sales at stores open for at least a year fell 1% globally. It’s the first time sales fell by that measure since the last quarter of 2020.

Several factors were operating against McDonald’s this past quarter, including a tough comparison to last year. In the same quarter a year ago, McDonald’s got a 10.3% sales boost, mostly attributed to its viral Grimace shake — a purple, sugar-loaded drink in honor of Grimace’s “birthday.” The shake became a sensation after TikTok users posted videos of themselves pretending to die after drinking the shake.

But McDonald’s also has said for the past several quarters that some customers — particularly low-wage earners — are revolting against what many see as bad value.

“Beginning last year we warned of a more discriminating consumer, particularly among lower income households — and as this year progressed, those pressures have deepened and broadened,” said CEO Chris Kempczinski on a conference call with investors Monday morning.

So the company in December unveiled an expansion of its strategic plan to lure back price-conscious customers. The plan focuses on value meal plans like the popular $5 meal introduced earlier this summer.

Those meals, which have shown early signs of popularity, hadn’t fully taken effect until recent weeks and weren’t fully baked into last quarter’s results. The $5 meal deal sales have exceeded expectations, the company said Monday. But Kempczinski said on the call that the company has more work to do, noting, “It’s clear that our value leadership gap has recently shrunk.”

“As consumers are more discriminating with their spend, we are focused on the outstanding execution of delivering reliable, everyday value and accelerating strategic growth drivers like chicken and loyalty,” said Kempczinski in a statement.

Kempczinski also said McDonald’s will continue to innovate and change as customer demands shift. He pointed to McDonald’s new emphasis on chicken, which is now on par with beef sales at restaurants. And the company is testing out a new burger, called the Big Arch, which features two patties, cheese, crispy topping and tangy sauce.

“The hallmark of a great company is its ability to perform in good times and in bad, and we are resolved to reignite share growth in all our major markets regardless of the prevailing market conditions,” Kempczinski said on the investor call. “This won’t happen overnight. But it’ll happen.”

Supersized customer anger​

For the first couple years of America’s inflation crisis, restaurants and food companies like McDonald’s and Coca-Cola said consumers were responding well to constant price increases and were willing to shell out more for their favorite meals, snacks and treats. But the tide began to turn last year. McDonald’s then reported what has become a trend for the restaurant and its competitors: Customers saying no to higher prices.

Food prices have continued to rise over the past year, but most of that increase has come from food away from home — that is, restaurants and fast-food locations — rather than the grocery store. That means dining out has become something of a luxury for some Americans.

McDonald’s in particular, has been the focus of some consumers’ ire. A viral social media post last year showing an $18 Big Mac meal set off an online backlash to what many customers believed was corporate greed making inflation worse for everyday Americans. It turned out to be a single rest stop in Connecticut that had posted that price, which is double the national average. McDonald’s president has since apologized — and urged franchisees not to go rogue anymore.

Whether or not that viral post was the final straw for McDonald’s customers, Americans have been punishing the company ever since. Sales have been sinking, and the company’s profit margin, once rising steadily in the post-pandemic years, has fallen back to where it was pre-Covid. The company on Monday said prices keep rising, but as it absorbs some of that additional cost, McDonald’s will continue to look for ways to grow its profit — even as customers demand more value.

McDonald’s (MCD) stock rose more than 3% Monday but has fallen 12% this year, missing out on a larger market rally.

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Clarification: This story has been updated to clarify when McDonald’s unveiled its strategic plan.

 

[Heed Not]

I know they are regional, but you can still get a burger, large fries, and a drink from Cookout for $6

 

[Georgia Lucas]

This is partly why attempts to go into non-burger markets have failed. The Snack Wraps (chicken, lettuce, shredded cheese and sauce in a tortilla) was good, but they had a complicated set-up with specialized equipment, and with sales drying up by the 2010s they weren't able to justify it anymore. The same thing with pizza (despite shortcuts like pre-prepared crust and sauce, the new ovens and other equipment couldn't justify a national rollout). Traditional deli-style sandwiches were tested and cut after a short period (a few years after that Wendy's actually rolled "Frescata" sandwiches nationwide, but they also screwed up the ordering line and disappeared shortly after).

I haven’t seen proof but I suspect that Taco Bell’s addition of breakfast items has really fucked up their supply chain and ability to get things out fast. Taco Bell and McDonald’s were always the fastest in SoCal until recently.

 

[XYZpdq Jr.]

Almost rated that horrifying

iirc the magical pressure fryer is the secret behind KFC

 

[Heed Not]

I haven’t seen proof but I suspect that Taco Bell’s addition of breakfast items has really fucked up their supply chain and ability to get things out fast. Taco Bell and McDonald’s were always the fastest in SoCal until recently.

Fast food breakfast sucks anyway. Pancakes, bacon, eggs, and sausage are all fast few-ingredient foods done at home. Especially for a place like Taco bell there is no point in fucking up your supply line for it

 

[Xarpho's Return]

Your posts itt have been so interesting. Do you think it's possible for a one off drive-thru place to specialize in making higher quality fries etc deep fried in tallow?

Maybe...but today vegetable oil is significantly cheaper than beef tallow. That may have been their game all along, to switch the formulation for cost and not health reasons, then just say it was for health reasons.

I distinctly remember a time when water bottles were quite sturdy, then all around 2006-2007 they became thin, crinkly pieces of shit that were bragged to have "50% less plastic" or whatever, ostensibly for "green" reasons but it sure had an increase for their profit margins.

Unfortunately I don't have data for the wholesale price of beef tallow versus vegetable oil blends in 1990, so I can't make a good comparison...but it sounds right up their alley.

As far as (real) deep frying goes; consider getting a one-quart Fry Daddy for $20 or less on the used market.

None of them are recommended for regular eating. McDo is more of a place people go to hang out on the cheap or as a special treat, while Jollibee and Mang Inasal are more regular, everyday kind of places, particularly the latter because of unlimited rice.

I'm always hearing that one of the differences about the international McDonald's being overall nicer is that they are more upscale than other local eating, whereas stateside restaurants aren't.

I wouldn't be surprised if the situation was reversed in the United States; I haven't had Jollibee before (they are rare—there's two about two hours away from me) but the overall experience seems to be more upscale than what McDonald's has to offer.

I know they are regional, but you can still get a burger, large fries, and a drink from Cookout for $6

When I was out in the Mississippi-Tennessee area on vacation I saw signs for Cook Out and another chain called Jack's (not to be confused with Jack in the Box). That does remind me of something pertinent to the discussion—back in the 1980s and 1990s there was a small chain in Baton Rouge called Fast Track Burgers & Fries, their gimmick being that a limited menu and no seating allowed them to keep prices low and competitive with McDonald's (one of their commercials parodies one "Golden Starches")...and perhaps because of this (and Rally's, which had a similar concept but across a larger area) Baton Rouge was the site of the first McDonald's Express location, which was the site of the very first double-drive through McDonald's restaurant (the same article notes that because of the smaller size they didn't sell Big Macs). You'd think with McDonald's going to mostly drive-through these days (some dining rooms are STILL shut normally) prices would be lower...

 

[PhoBingas]

Hardees is more expensive then McDonalds now. McDonalds catches all the flak because they are at the top of the heap, but a Hardees quarter pound burger retails on average for 8 Dollars to the McDonalds 6.

But at least I consider Hardees more fast-casual than fast food. Quarter pounder is 7 something where I am and a McDouble's over 4 bucks after tax, literally not even worth it anymore. If I have a hankering for fast food I have a indy pizza place that has real good 4-something jumbo all-meat slices that are both tasty and fill you up. If I get a hankering for chicken burgers or burgers I'll just make my own. It's piss-easy to deep fry a chicken thigh after you bread and pound it out, and so are smash burgers if you've got a range hood or don't mind smoking your house or flat out.

 

[neverendingmidi]

I don't have a source for that either, but you are 100% correct. Frying chicken at scale and speed requires a device that combines the danger of a deep fryer and a pressure cooker.

i.e. A Henny-Penny, which pretty much took off because Colonel Sanders invested in it.

 

[AnimeSucksCopeAndSneed]

Well McDonald's is too expensive now; what the fuck did they expect?

 

[Atypical Dog]

I'm always hearing that one of the differences about the international McDonald's being overall nicer is that they are more upscale than other local eating, whereas stateside restaurants aren't.

I wouldn't be surprised if the situation was reversed in the United States; I haven't had Jollibee before (they are rare—there's two about two hours away from me) but the overall experience seems to be more upscale than what McDonald's has to offer.

Yeah, the real local food here, for example, is the carinderia/turo-turo (literally point-point, named so because you point at the food you want). Proper cafeteria style eating.

https://en.wikipedia.org/wiki/Carinderia

Compared to the McDonald's, these are cheap. For what you pay for the cheapest burger meal, the Burger McDo meal (this burger, fries, and drinks) is Php 140 (around $2.50), which would probably net you two bowls of goto/lomi (kind of like congee/congee with noodles) or rice and three, or two rices and two meals at a carinderia. McDonalds' low-end offering is this mix & match, at PhP 75, comparable to rice and one viand at a carinderia, two if you're somewhere cheaper.

I wouldn't be surprised if the Jollibee is better than your local McDonalds because it's best foot forward and most of them are probably in expensive areas of the U.S. where they can afford to mass import Filipino nurses, seamen, and so on. That's been the general strategy so far, follow the overseas workers.

The last time I went to McD's was to grab some breakfast before wandering the ren faire last year and it was an experience so bleak and surreal it felt like the Twilight Zone. There was no color inside the building. It was just grays and browns. No Ronald, no Grimace, no Hamburglar, save for the little display for Happy Meals. There was no one behind the counter, in fact the counter had been glassed off, kiosk ordering only. I picked up my coffee and sausage McMuffin from a dumpy woman behind a plexiglass window, she looked like she'd been trapped in there since 1987. The coffee and McMuffin were alright, but triple the cost of what I remembered. I sat there looking around as I ate and everything seemed so dead. Even the PlayPlace™ appeared like something out of a liminal space AI horror video, like it didn't belong there, a parasite attatched to a dead host. If I had any nostalgia left for the McDonald's of the 80s and 90s it died that day.

This happened here too, though we do still have some actively used playplaces, the exteriors have become pretty modern. Not as colorless, we still have lots of red around - probably because the franchisee for the Philippines knows we love colorful things and having lots of stuff.

Do you guys get McCafe at some branches too? We have some with the fancy coffee and the cakes at the bigger branches. I don't really like them because they feel overpriced and share seating with the actual McDo.

 

[Melee Bouquet]

Maybe...but today vegetable oil is significantly cheaper than beef tallow. That may have been their game all along, to switch the formulation for cost and not health reasons, then just say it was for health reasons.

Given the way it impacted sales I'm not so sure, but public opinion was deeply against them at that point and the food industry was clearly moving to be in line with the prevailing dietary junk science. I guess tallow is still too taboo. I also notice that there are very few places that offer snacks only. Auntie Anne's Pretzels is the only savory focused chain I can think of which doesn't offer meals-- and I think they only exist in malls.

Thank you for the Fry Daddy rec

if you've got a range hood or don't mind smoking your house or flat out.

This is one of the big reasons I don't want to do deep frying at home but I guess I'll do it on the back porch or something.

 

[Xarpho's Return]

Yeah, the real local food here, for example, is the carinderia/turo-turo (literally point-point, named so because you point at the food you want). Proper cafeteria style eating.

There are cafeteria-style restaurants in the States that offer regional cooking (American food)--so stuff like fried chicken, fish, cheap cuts of beef, with sides and desserts. I've found the price is comparable to fast food (significantly more and better stuff, too)...unfortunately they seem to be a dying breed. Self-serve buffets are more common, but these tend to have bad food and worse health ratings. (Chinese buffets in particularly are routinely the dirtiest, nastiest restaurants that show up on health reports, your local McDonald's is clean and sanitary compared to them).

Do you guys get McCafe at some branches too? We have some with the fancy coffee and the cakes at the bigger branches. I don't really like them because they feel overpriced and share seating with the actual McDo.

Not really, no. There was a "real" McCafe that opened in 2001 in Chicago (an image here here for instance) and there were a handful of restaurants that offered a full menu but what ended up happening by the late 2000s was that it was just the name applied to the coffee, the related poor-mans-Starbucks drinks (like iced lattes), and some crummy pastries.

This happened here too, though we do still have some actively used playplaces, the exteriors have become pretty modern. Not as colorless, we still have lots of red around - probably because the franchisee for the Philippines knows we love colorful things and having lots of stuff.

The classic "red and white" McDonald's that have gotten demolished in the last 10+ years weren't always as colorful. As I mentioned in my post back in page four, the stores received some updates in the early 2000s/late 1990s before being demolished. Bricks were usually the speckled tan seen in new home construction in the 1970s and 1980s, roofs were brown or red but were sometimes other colors. This location in Waco, Texas escaped those exterior updates but was demolished in 2013. The teal roof is a bit garish but the exterior is closer to what restaurants looked like exterior-wise.

The roof is a trademark of the company's, if they closed a location like that the first thing they would do is remove the roof (so it's just a sloping roof, not the second angle on top). The overall design does vary by country, the sloping roof never went away completely in places like England, this is their preferred prototype when their American counterparts were replaced by what is colloquially referred to as the "yellow eyebrow" design (which is now outmoded with an even worse design).

Thank you for the Fry Daddy rec

The comparable ones I see on eBay are more than $20 (and the one that does doesn't seem to come with the scoop)...I'm trying to get rid of mine for that price but the shipping would be another hassle. I might end up posting it on eBay if FB Marketplace doesn't pan out. Or just splurge for new at around $40. (Frying is a bit of an art--the McDonald's fries are a two-step process that are partially cooked before getting to the store).

 

[Thiletonomics]

Has the lack of McDonald's coupons (aside from the stuff on their app), compared to their competitors (i.e. Burger King, Jack In The Box, Subway), also contributed to people choosing to eat elsewhere?

 

[AnotherPleb]

I wondered the same question, who's the fucking weirdo who asked for that bland and sterile design?

It's neo-brutalism.

 

[Super-Chevy454]

It's neo-brutalism.

It remind me of that old video about why modern architecture sucks from PJW.

 

[CHARizard]

Has the lack of McDonald's coupons (aside from the stuff on their app), compared to their competitors (i.e. Burger King, Jack In The Box, Subway), also contributed to people choosing to eat elsewhere?

The Hardees app is why I will generally choose that slop over others if I am getting fast food. The app is fairly generous with bonuses and I have basically never failed to get a free frisco sandwich everytime I go.

 

[Bulk Bogan]

Incoming storytime from Uncle Fierce,

The last time I went to McD's was to grab some breakfast before wandering the ren faire...

I too had that tradition. When my parents took me as a kid, the day would always start at McDicks, and that continued as it changed to me taking them. Now? For all the reasons you said, all the reasons mentioned in this thread, we go somewhere else instead, and recently we've just heated up some prepackaged slop from the grocery store. The tradition of a quick shitty breakfast before renfest abides, but McD's (and indeed any fast food place's) place in it turned out to be superfluous.

I went by myself just last week since I'd not been in more than a year, and I figured I'd give it a shot since I was already driving by. It took me 20 minutes and pulling into a parking spot to get the wrong order, then another 10 to get the right one, and the whole time I'm regretting not just going home. Then, the McDoubles tasted like how chemicals smell, and everything was ungodly expensive, and though the McChickens are still as ok as they ever were it's just not worth it anymore. It's not fun, it's not good, it's not fast, it's not cheap.

 

[FierceBrosnan]

Do you guys get McCafe at some branches too? We have some with the fancy coffee and the cakes at the bigger branches. I don't really like them because they feel overpriced and share seating with the actual McDo.

We do, I think there is still one in the Wal-Mart not too far from me. It always feels weird paying extra for a fancy coffee at McDonald's when their regular blend is just fine.

 

[browserbowser]

Fast food crashing = economy crashing

Do me a favor and pester your preferred AI about it if you need an explanation

 

[Super-Chevy454]

Fast food crashing = economy crashing

Do me a favor and pester your preferred AI about it if you need an explanation

Chances then Alexa will surely get a burn-out to answer that question.

 

[Falcos_Commisar]

They are fucking broke you journoscum retard. They have no money to spend! They were poor but scraping before but now they are broke. They are in pennies for dinner territory and their local food bank is probably empty because faggots like you helped put a senile child sniffer into the White House and caused the most insane invasion of the continental United States imaginable.

This motherfucker is so out of touch and is typical of the upper echelon of the DNC's connection with their core voters.

While this fucktard is yapping about stock prices hurting because people cannot afford to eat you have a cackling lunatic in a camel mask screaming body parts out like a fucking tourettes sufferer that they are trying to pass off as a good option for president and this waste of oxygen is part of their circle jerk.

It is impossible that you hate journos enough

Too bad people like him will probably ensure a Dem in the white House until 2032.....