On April 30, McDonald’s reported its first-quarter earnings, and the results were colder than a McFlurry left in the car. Global comparable sales dropped 1%, with U.S. sales taking a 3.6% hit—the worst quarterly dip since the pandemic’s peak. Revenue stayed flat at $6.5 billion, missing Wall Street’s $6.6 billion forecast. Non-GAAP earnings per share came in at $2.97, a dime shy of expectations. The stock took a beating, sliding 2% in pre-market trading that day. An E. coli outbreak linked to Quarter Pounders didn’t help, shaving 1.4% off U.S. sales last quarter and marking the company’s steepest single-day drop in five years on February 10.
The consumer pinch is real. Inflation’s got folks clutching their wallets tighter than a Happy Meal toy. Low- and middle-income customers are skipping breakfast and cutting back on restaurant visits, a trend McDonald’s brass flagged in their earnings call. Even a $5 meal deal and the hyped Chicken Big Mac couldn’t pull traffic through the arches. Global systemwide sales mirrored the comps decline, down 1% year-over-year.
But it’s not all soggy fries. McDonald’s is doubling down on value plays—think revamped value offers and a big push on beverages. Snack Wraps are slated for a comeback, and chicken’s still a bright spot, with plans to lean harder into poultry. The Minecraft tie-in’s got kids buzzing, and digital sales channels are holding steady. The company’s also got 2,100 new restaurants in the pipeline, aiming to hit 50,000 locations by 2027. That’s a lot of Big Macs.
Still, the headwinds are stiff. Rising costs for labor and ingredients are squeezing margins, and consumer sentiment’s gloomier than a rainy day at the PlayPlace. McDonald’s stock is trading below its 200-day moving average, a technical red flag not seen since November. Year-to-date, it’s lagged the Dow, with shares down about 8% while the index gained 3%.
Wall Street’s got its own mixed order. Analysts’ 12-month price targets range from $300 to $340, suggesting 10-15% upside from the current $290-ish level. But downgrades have trickled in—some firms slashed ratings citing softer traffic and macroeconomic clouds. Dividend hunters might still bite: MCD’s 2.3% yield is solid, backed by 48 years of payout hikes.
McDonald’s is betting on innovation and expansion to turn the tide. On April 16, it announced a tech partnership to streamline drive-thru ops with AI-based ordering. Loyalty programs are gaining traction, and the company’s global footprint—40,000 restaurants across 100 countries—gives it scale few can match.
The numbers don’t lie: 2024’s been rough, with two straight quarters of declining comps. First-quarter operating income fell 8% to $2.7 billion. Net income dropped 12% to $1.9 billion. Debt’s manageable at $37 billion, but free cash flow’s down 10% from last year. Average check sizes are up, but fewer folks are pulling up.