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McDonald’s sales miss market expectations amid boycott calls in several markets

McDonald’s, the global fast-food giant, has posted below expectations quarterly results in the first quarter as it fell short of Wall Street estimates for sales amidst economic pressures and geopolitical tensions.

Global fast-food giant McDonald’s sales miss expectations on the back of geopolitical tensions (Bloomberg)

Despite posting a quarterly adjusted per-share profit of $2.70, slightly below analysts’ estimates of $2.72, the company reported a 1.9% increase in worldwide same-store sales, below the forecasted 2.1%. This was attributed to budget-conscious consumers cutting back on restaurant meals, especially in international markets affected by the Middle East conflict.

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McDonald’s said its higher U.S. sales in the first quarter helped it overcome weakness in the Middle East and other markets where consumers have been boycotting the brand.

McDonald’s said its revenue rose 5% to $6.17 billion in the January-March period. That was in line with Wall Street’s estimates.

Net income was up 7% to $1.93 billion. Earnings, adjusted for restructuring charges, were $2.70 per share. That was short of analysts’ forecast of $2.72.

In the United States, where McDonald’s saw a 2.5% rise in same-store sales, customers gravitated towards low-priced menu options, such as breakfast value bundles and items priced under $4. However, this growth was significantly lower than the 12.6% growth reported in the previous year, indicating consumer caution amid inflation concerns.

Internationally, same-store sales declined slightly in McDonald’s franchised markets, particularly in regions like the Middle East, Indonesia, and Malaysia, where boycotts against the brand persisted due to perceived support for Israel. To address this, McDonald’s announced the acquisition of its Israeli franchisee, Alyonal Limited, and assumed control over the country’s 225 restaurants.

Overall, McDonald’s revenue rose 5% to $6.17 billion, in line with Wall Street estimates, while net income increased by 7% to $1.93 billion. However, the company’s performance underscores the impact of global economic challenges and geopolitical tensions on consumer behavior and restaurant sales.

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