McDonald’s CEO Chris Kempczinski addressed concerns over recent menu price increases and their impact on affordability during the company’s latest earnings call.
The fast-food giant faced criticism from some customers regarding higher prices, leading to a discussion on strategies to re-engage lower-income consumers.
McDonald’s CEO Addresses Menu Price Increases
Despite global same-store sales increasing by 3.4%, falling short of Wall Street’s expectations, Kempczinski attributed the earnings results to the ongoing conflict in the Middle East.
However, domestically, same-store sales saw a more positive trend, rising by 4.3%, aligning closely with previous quarters’ performance.
In the US, McDonald’s experienced “strong average check growth driven by strategic menu price increases.” However, the CEO acknowledged a decline in transactions, particularly among lower-income customers earning $45,000 or less annually.
Kempczinski suggested that the affordability of eating at home may have led to fewer dine-out occasions for these consumers, with grocery prices cooling faster than the Consumer Price Index category for food away from home.
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McDonald’s Shifts Focus to Affordability
To address these concerns, McDonald’s plans to focus more on affordability, emphasizing absolute price points to attract lower-income customers. The company aims to maintain its $1, $2, $3 menu platform while implementing local initiatives to provide better value for consumers.
While franchises have the autonomy to set their prices, Kempczinski assured that efforts would be made to ensure affordability for customers across different locations. However, he did not provide specific details on how or when these initiatives would be implemented.
Despite recent criticisms and challenges, Kempczinski expressed confidence in the resilience of McDonald’s business. The company remains committed to adapting to changing consumer preferences while maintaining its position as a leading fast-food chain.
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