"Poor Man's Meal" no longer selling well? McDonald's Q2 same-store sales decline for the first time since the outbreak | Financial Report Insights

As consumer demand weakens, international consumer giant McDonald's is also struggling.

On Monday, July 29th, McDonald's released its second-quarter financial report for 2024, with both profit and revenue falling short of analysts' expectations.

1) Key Financial Data

Revenue: Revenue for the first half of the year was $12.659 billion, a 2% increase year-on-year. Second-quarter revenue was $6.49 billion, below analysts' expected $6.61 billion.

Net Profit: Net profit for the first half of the year was $3.951 billion, a 4% decrease year-on-year. Second-quarter net profit was $2.022 billion, a 12% decrease year-on-year.

Operating Profit: Operating profit for the first half of the year was $5.655 billion, with second-quarter operating profit at $2.92 billion, a 6% decrease year-on-year.

Earnings Per Share: Earnings per share for the first half of the year were $5.46, a 2% decrease year-on-year. Second-quarter earnings per share were $2.80, an 11% decrease year-on-year. Excluding restructuring costs and other one-time items, earnings per share were $2.97, below analysts' expected $3.07.

Weak Same-Store Sales in the Second Quarter

In the second quarter, McDonald's same-store sales fell by 1%, below StreetAccount's forecast of 0.4% growth, marking the first decline in company-wide same-store sales since the fourth quarter of 2020.

In the U.S. market, same-store sales declined by 0.7%, mainly due to a decrease in foot traffic, partially offset by the average check growth from strategic menu price increases. A year ago, due to its popular Grimace Birthday Bundle, U.S. same-store sales grew by over 10%.

Same-store sales in international operated markets (including major markets like France and Germany) declined by 1.1%, with performance in segments affected by declines in same-store sales in multiple markets, with France being a major driver.

Same-store sales in international developmental licensed markets declined by 1.3%, with the ongoing impact of Middle East conflicts and declining same-store sales in China offsetting the rise in same-store sales in Latin America and Japan.

Over the past year, as more consumers focus on value, spending at restaurants, especially chain fast-food restaurants, has been cut.

McDonald's stated:

"This quarter saw a slight decline in foot traffic at its U.S. restaurants... more price-sensitive customers are seeking more value-oriented products." Executives had previously warned that with the weakening consumer environment, competition for customers has become more intense.

Now, McDonald's is leaning towards attracting customers through discounts. A week ago, McDonald's planned to extend its value meal plan in the United States to four weeks and stated that it is attracting customers.

As of the time of publication, McDonald's pre-market trading is up 1.13%.