McDonald’s U.S. same-store sales increased 2.5% in the first quarter, the Chicago-based fast-food giant said on Tuesday, as digital, delivery, marketing and operations all drove sales in the first three months of 2024.
But those sales came through “strategic menu price increases,” the company said. McDonald’s and other fast-food chains have generated sales largely through price hikes that are largely a reaction to higher costs.
Still, it represented the 15th straight quarter of same-store sales growth for McDonald’s in the U.S. Globally, same-store sales grew 1.9% in the period, the 13th straight quarterly increase.
McDonald’s sales on a two-year “stacked” basis increased 15.1%, a slight acceleration from the 14.6% two-year figure in the fourth quarter.
Still, traffic has been down, and executives on Tuesday suggested that the company will focus more highly on value this year.
That weakness isn’t just in the U.S., but in many major markets such as Canada, China, Australia, Germany and Japan. Executives said that the brand does better in markets where it has strong national value.
“Macro headwinds were more significant than even we anticipated coming into the year,” CFO Ian Borden said.
And they are working to develop a national value platform in the U.S., arguing that franchisee profitability is strong enough to warrant more traffic-driving efforts.
“We have a value message,” CEO Chris Kempczinski said. “But we’re doing it in 50 different ways with local value. What we don’t have in the U.S. is a national value platform.”
Revenues at the company increased 5% in the quarter to $6.17 billion. Net income increased 7% to $1.9 billion, or $2.66 per share. That matched Wall Street expectations for revenues but missed on earnings.
Same-store sales increased 2.7% in the company’s International Operated Markets, which feature its most developed markets such as Canada, Australia and the U.K. They declined 0.2% in the company’s less-developed markets, largely due to weakness in the Middle East brought on by the conflict in Gaza.
Back in the U.S., McDonald’s was able to generate sales with marketing, which has largely fueled the company’s sales strength coming out of the pandemic. The company’s anime “WcDonald’s” promotion appeared to be successful.
The company also made improvements to its smaller burgers for Cheeseburgers, McDoubles and Big Macs, known as “Best Burger,” that is now in about 80% of global restaurants. McDonald’s also credited improved operations for driving business in the period.
Digital also drove sales, particularly to members of MyMcDonald’s Rewards, its loyalty program. Loyalty members generated over $6 billion in sales to the company and franchisees in the company’s 50 global markets with the loyalty program. Sales to loyalty members neared $25 billion over the past 12 months in those markets, the company said.
Overall, systemwide sales increased 3%, which reflects same-store sales increases and unit growth. McDonald’s has been focused on unit count expansion worldwide, including in the U.S., believing that its sales growth warrants more locations.
Yet a key question for the company may be on consumer value. Prices at McDonald’s and other fast-food restaurants have soared over the past two years, which has led many consumers to question the chain's value.
Restaurant chains have been losing traffic to grocers and convenience stores as a result. McDonald’s executives have been more focused on this topic in recent months amid concern about the state of the consumer, particularly those in lower-income households.
“Eating at home has become much more affordable,” Kempczinski told analysts in February, explaining a loss of traffic from lower-income consumers.
UPDATE: This story has been updated to include information from the company’s first quarter earnings call.
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