First decline in global sales for McDonald’s in four years

Global fast food giant McDonald’s has reported a decline in sales for the first time in almost four years, citing rising prices and ongoing boycotts related to the conflict in Gaza.

In its second quarter earnings report, the company revealed a 1% decrease in same-store sales – the first drop since the COVID-19 pandemic forced many of its branches to close in 2020. McDonald’s CEO Chris Kempczinski acknowledged the company’s “value leadership gap” compared to its competitors, but assured investors that they were actively working to address this issue.

However, Kempczinski also admitted that same-store sales were expected to continue to decline in the coming quarters. The company’s total revenue remained flat at $6.5 billion, while net income decreased by 12% to $2 billion.

The decrease in sales is attributed to a decline in customers in the US, offset by price increases, as well as the ongoing effects of the war in the Middle East and weaker demand in China. McDonald’s has also faced challenges with rising costs of paper, food, and staff, with increases of up to 40% in some markets.

To combat the decline in sales, the company is focusing on introducing new product lines and meal deals to entice customers back. Meal deals have already proven successful in markets such as the UK.

Last year, McDonald’s faced backlash and boycotts when its Israel franchise announced it would be donating free meals to troops fighting in Gaza. Critics accused the company of supporting the killings of Palestinians. However, McDonald’s has since distanced itself from the controversy and reiterated its stance against violence.

The company’s global headquarters in the US also clarified that they do not take sides in the conflict and have no involvement in the actions of their franchise in Israel. The franchise was taken over by the company earlier this year.

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