This is an English adaptation of a FoodBud historical article originally published on July 31, 2024.
McDonald’s recently reported second-quarter results. Q2 revenue was US$6.49 billion, roughly RMB 46.89 billion, essentially flat year on year. Net profit was US$2.02 billion, roughly RMB 14.59 billion, down 12% year on year.
As of June 30, McDonald’s had 42,406 restaurants globally. The U.S. market had 13,484 locations, while China had 6,270. Globally, the company added 388 net new restaurants in the period.
McDonald’s China had 6,010 restaurants as of March 31, meaning the China market added 260 net new stores in Q2.
On McDonald’s earnings call, management again pointed to challenges in China and the Middle East. The U.S. home market also faced pressure. Fast-food traffic declined in markets including the U.S., Australia, Canada, and Germany.
The pricing response has been similar across markets. In the U.S., McDonald’s introduced a US$5 value meal. In China, RMB 9.9 meal deals have become widespread across the market. The underlying challenge is comparable: operators are trying to defend traffic and frequency as consumers become more price-sensitive.
McDonald’s first tested the US$5 meal in northern New York stores. The offer performed well, particularly among lower-income consumers, and helped lift overall sales. The company then expanded the meal nationwide.
Another U.S. promotion offered free fries on Fridays with a minimum US$1 purchase. In China, McDonald’s also noted heavy promotional activity because market competition remains intense.
Bloomberg reported that high inflation has led lower-income consumers to tighten spending. A January U.S. survey by Revenue Management Solutions found that among consumers earning less than US$50,000 per year, 25% had reduced fast-food visits to cut living expenses. A LendingTree survey found that 78% of consumers considered fast food a luxury.
McDonald’s US$5 meal targets two income groups: consumers earning below US$45,000 annually, and those earning US$45,000 to US$75,000. In practice, customers buying the US$5 meal had an average ticket above US$10, meaning the value offer also drove add-on purchases.
The US$5 meal was set to remain available at 93% of U.S. McDonald’s restaurants through August.
Note: The promotion timing and financial figures above are historical as of July 31, 2024.
