As the Iran war exacerbates cost-of-living pressures, the fast-food chain has been redoubling efforts to address affordability.
McDonald’s posted first-quarter profit of US$2 billion, up 6% from a year earlier, while revenue rose 9% to US$6.5 billion. NEW YORK: McDonald's reported higher profits Thursday as the chain's value promotions and pop culture-oriented marketing efforts lifted sales in most leading markets.
As the Iran war exacerbates cost-of-living pressures, the fast-food chain has been redoubling efforts to address affordability. The consumer environment is 'certainly not improving and it may be getting a little bit worse,' McDonald's Chief Executive Christopher Kempczinski said on a conference call. Profits for the first quarter were US$2 billion, up six percent from the year-ago period, while revenues climbed nine percent to US$6.5 billion. Global comparable sales rose 3.8%.
In April, McDonald's launched an 'under US$3 menu' in the US market, promising at least 10 individual items - such as a sausage burrito and the McChicken sandwich - at the lower price point. That is in addition to menu items such as the US$5 dollar 'McDouble Meal Deal,' which is comprised of a burger with two patties, small fries, four chicken nuggets and a small soda.
'You need to have a meal deal offering there to be able to drive interest and excitement around some of our core menu items,' he said. 'But you also need entry-level price points for those folks who are maybe a little bit more stressed around affordability and are looking for 'what can I get for US$3 or less? '' Most developed-economy markets have employed such an approach but Kempczinski singled out France as a weaker market.
The company on Tuesday announced new promotions in France, citing rising inflation pressures on households. The hope is to bring sales in France back to levels in top-performing markets like Britain, Germany and Australia, the company said. Executives highlighted recent marketing drives featuring the Super Mario Galaxy and KPop Demon Hunters movies, along with nostalgia-oriented campaigns around the television show 'Friends,' in driving consumer engagement and sales. McDonald's shares dipped 0.4% in late-morning trading.
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