30/10/2024
By Rob Wile and Alexandra Byrne
Life under the Golden Arches hasn’t been easy this year.
McDonald’s has faced a customer revolt over pricey Big Macs, an unsolicited cameo in election-season crossfire, and now an E. coli outbreak — just as the company had been luring customers back with more affordable burgers.
Still, like U.S. consumers themselves, Mickey D’s remains in sturdy shape heading into 2025, despite its ongoing challenges.
The fast-food giant reported Tuesday that it had reversed its recent U.S. sales drop, posting a 0.3% uptick in the third quarter. Foot traffic was still down slightly, but the company said its summer of discounts was paying off.
“We will stay laser-focused on providing an unparalleled experience with simple, everyday value and affordability that our consumers can count on as they continue to be mindful about their spending,” CEO Chris Kempczinski said in a statement alongside the earnings report.
The financial results come toward the end of a humbling year for the nearly $213 billion restaurant chain, whose shares remained steady on the heels of its latest earnings. Kempczinski sought to reassure investors that the E. coli outbreak, linked to Quarter Pounder burgers, was under control after the health crisis temporarily dented the company’s stock and caused U.S. foot traffic to drop nearly 10% in the days afterward, according to estimates by Gordon Haskett financial researchers.
“We view it as being behind us,” Kempczinski said on Tuesday’s earnings call.
Despite a difficult quarter, McDonald’s looks resilient in the face of various pressures, analysts say — something the company shares with U.S. consumers overall.
Relative to other major brands, like Starbucks, that have struggled to reconnect with customers who are watching their wallets, McDonald’s has done an “excellent job” of bringing diners back, said Ravi Dhar, the director of Yale University’s Center for Customer Insights.
“McDonald’s has also done a good job of embedding the brand in popular culture to enhance its relevance and meaning around fun and family. But it also needed to modify the product line to meet the expectations of a consumer who is on a tight budget,” he said.
McDonald’s didn’t respond to requests for comment.
For many consumers, the fast-food giant’s menus serve as an informal gauge of the economy overall, said Sara Senatore, a Bank of America analyst covering restaurants. “The spotlight is always on McDonald’s because it’s so big” and something of a “bellwether,” she said.
That may be one reason it has cropped up in the presidential race. Vice President Kamala Harris has touted the summer job she once held at the burger chain, looking to shore up her middle-class credentials. That spurred former President Donald Trump to sling fries this month at a Philadelphia-area McDonald’s in a photo op.
Mickey D’s’ $5 meal deal, which it launched in late June to jumpstart slumping sales, has given the company an appealing price point to advertise nationwide, Senatore said, speculating that it could open the door to a new permanent value offering. But before that promotion rolled out, the company’s reputation as a low-cost option had taken a bruising hit.
Like many major brands, McDonald’s raked in big profits as the economy reopened from the pandemic. In October 2022, executives were boasting that they’d been raising prices without crimping traffic, even as competitors began to warn that some customers were closing their wallets after inflation peaked above 9% that summer. Still, the U.S. had repeatedly dodged a much-forecast recession, and Americans kept spending on nonessentials like travel and dining out — despite regularly relaying to pollsters their dismal views of an otherwise solid economy.
But by early this year, photos of eye-watering menu prices at some McDonald’s locations — including an $18 Big Mac combo at a Connecticut rest stop from July 2023 — went viral, bringing diners’ long-simmering frustrations to a boiling point that the company couldn’t ignore. On an earnings call in April, Kempczinski acknowledged that foot traffic had fallen
Source : https://www.nbcnews.com/business/consumer/how-mcdonalds-e-coli-crisis-inflation-politics-reflect-american-story-rcna177156
