McDonald’s famous slogan “I Love It” doesn’t seem to work as well as it did in the past. At least that’s what the latest balance sheet of the American multinational, one of the most popular and iconic brands in the food industry, shows. fast foodIn a complex scenario marked by inflation and boycotts, the hamburger giant has recorded a “boom” in sales worldwide. The decline is not as pronounced, but still significant: It is the first time this has happened since the beginning of the pandemic.

Short-term sales prospects are not bright either.

Declining sales and profits. The results of the second quarter for McDonald’s are clear: the multinational failed in sales and profits. The company’s earnings report released on Monday showed that global comparable sales fell by 1% – the percentage of which takes into account stores open for at least a year – and that there was a 1.1% decline in the markets the company operates internationally, and a 1.3% decline in the company and its licensees. In the US, where it has by far the largest presence, the decline was slightly smaller at 0.7%.

At the end of the second quarter, net profit was $ 2 billion 22 million, which is a decrease of 12.5 percent compared to the previous year. Revenue in this period amounted to 6,490 million, which was 0.1 percent less in absolute terms. If the focus is expanded, in the first half of 2024, the chain made a net profit of 3,951 million, which is 3.9 percent less than last year.

Because it matters? Because the 1% drop recorded between April and June is the multinational’s first in four years. To find the previous one, you have to go back to the last quarter of 2020, in the middle of the pandemic, when the health crisis forced businesses to close and quarantines left millions of potential customers stranded at home.

McDonald’s is not just any multinational company. It is among the giants of the fast food sector, along with Subway, KFC and Burger King. In fact, a year ago, Food & Wine ranked slightly above Subway, again leading in the US, with more than 38,000 establishments worldwide. Fast food chains have been signaling for months that they are no strangers to the inflationary scenario that the US economy is facing, and that the EU, including Spain, is no stranger to, currently at 2.8% annually.

So what are the reasons? Analysts highlight several. First of all, the increase in prices. Inflation leads consumers to eat out less or choose cheaper options. In May, McDonald’s noted that the price of a Big Mac in the United States had increased from $4.39 to $5.29 in 2019, representing a 21% increase in price, in a context of “historic increases” in supply chain costs and wages.

Coca-Cola also noted “some weakness in out-of-home channels,” and just a few days ago, multinational Lam Weston, which operates as a supplier to McDonadl’s or Yum! Brands, which brings together KFC, Pizza Hut and Taco Bell, admitted it had closed a “disappointing” quarter with a 5% drop in net sales in the quarter. In a statement after publishing the results, they cited a loss of market share and a “greater than expected” “slowdown” in restaurant activity in the U.S. and other countries.

What does the data tell us? Guardian It cites a report by market research firm Circana, which shows that customer flows in fast food restaurants in the US will fall slightly by 2% in the first half of the year. Beyond its major market, McDonald’s will also suffer less from traffic in its businesses in France and the Middle East, and will not be immune from the situation in China.

Another key to understanding the latest quarter’s results is the chain’s boycott by pro-Palestinian groups. That’s because of Alonyal, the McDonald’s operator in Israel, who decided to hand out thousands of free meals to Israel Defense Forces personnel after the war in Gaza began, a decision that even led to divisions among franchisees. That caused McDonald’s such a headache that it decided to take over the Israeli franchise in the spring, months after the dispute began, and take back ownership of 225 restaurants in the country.

Price push up. The multinational also decided to focus on one of the most sensitive points that affects demand the most: price. And it wasn’t the only one. In June, CNBC reported just in time that McDonald’s had decided to market a $5 menu in the US, Wendy’s was launching a 3-person breakfast, and Burger King was offering budget deals for “a few months.”

“This $5 meal is not an item that can be a permanent part of the menu; the cost has gone up so much that if franchisees sell $5 worth of food, they’re going to lose money on every customer who buys it,” Shubhranshu Sing of the Johns Hopkins Carey School of Business told CNBC.

Searching for a solution. McDonald’s Corporation CEO Christopher Kempczinski predicted that with the current poor results, the firm would have to “rethink its prices comprehensively” or rely on discounts to reverse the decline at a time when price increases are “leading consumers to reassess their prices” and their purchasing habits. The group most affected are lower-income customers. “We know how to do this. We have prepared the value handbook and we are working with our franchisees to make the necessary adjustments,” he said in comments quoted by the BBC.

Joe Erlinger, the president of McDonald’s in the USA, assures that the $5 promotion exceeded expectations and managed to attract consumers to the chain’s stores. If the measure was not felt in the balance of the second quarter, it is because the offer came into effect on June 25.

The ABC News chain notes that the offerings have also been successful in other countries, such as Germany and the United Kingdom. Sales prospects for stores that have been in business for at least a year are limited and could fall in the coming quarters. When total revenue, which includes sales at newly opened stores, is taken into account, the figure appears to be stable.

Images | Focus Images (Unsplash) and Jurij Kenda (Unsplash)

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