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McDonald’s is set to change its pricing strategy amid declining sales as bosses hint at a significant change to menus in the near future.
The fast-food giant reports a 1 per cent fall in sales from April to June in franchises that were open for at least a year. This marks the first time company sales have declined since the pandemic.
Chains had begun offering discounted deals since the start of the year in an attempt to win back customers who are conscious of rising costs. However, bosses suggest more changes may be necessary.
“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 McDonald’s CEO Chris Kempczinski on a conference call with investors.
“Consumers still recognise us as the value leader versus our key competitors, but it’s clear that our value leadership gap has recently shrunk,” Mr Kempczinski said in a statement on the latest figures. “We are working to fix that with pace.”
But the CEO admits that sales are likely to remain low over the next few quarters. To combat this the company is undergoing a “comprehensive rethink” of its pricing, leaning on discounted “value meals”.
The company points out successes such as the $5 (£3.89) Happy Meal in the US and a deal in the UK in which customers can get three items for £3. Both deals have been extended throughout the summer, with the UK deal returning on 31 July for four weeks – and these reports suggest they may be here to stay.
In January, Mr Kempczinski had also complained of a “meaningful business impact” caused by the Israel-Gaza conflict as many customers decided to boycott McDonald’s restaurants over their perceived support for Isreal.
Executives responded to this in April by buying back all of its Israeli restaurants – but continues to operate in the country. A McDonald’s spokesperson said the boycotts were “disheartening and ill founded,” with Mr Kempczinski adding: “In every country where we operate, including in Muslim countries, McDonald’s is proudly represented by local owner-operators.”
“So long as this war is going on ... We’re not expecting to see any significant improvement”, he said.
