McDonald’s to ‘rethink’ prices after first sales fall since 2020

But on the call with investors, Mr Kempczinski conceded the company had work to do to reclaim its reputation for value.

Price increases, made in response to inflation, had “led consumers to reconsider their buying habits”, Mr Kempczinski admitted.

Though some markets have been able to adjust, in others, “a more comprehensive rethink has been required”, he said.

McDonald’s has increased prices on key items faster than its peers, said Bank of America analyst Sara Senatore.

“Consumers are savvy, aware of that,” she said. “The $5 meal that they have launched may be starting to change perceptions, but we are not seeing a trend change yet in terms of transactions and that’s what they’re going to need to see.”

McDonald’s is the latest corporate giant to warn of slower consumer spending, including in major economies such as China.

The company said overall revenue, which includes sales at newly opened stores, was flat year-on-year. Profits slipped 12%.

McDonald’s said lower income customers were particularly hurting and the loss of those buyers was not being made up by wealthier households trading down.

Demand at its restaurants fell in the US, the company said, while weakness in France and price wars in China also weighed on sales.

France is among the countries where the brand has been caught up in boycott calls sparked by the Israel’s war in Gaza. Other US companies, including Starbucks, have also been affected.

“Consumers are being more discerning about where, when and what they eat, and I would say we don’t expect significant changes in that environment for the next few quarters,” a McDonald’s executive said on the call.