McDonald’s experienced a challenging conclusion to what initially seemed like a promising year, facing declining sales in numerous markets attributed to the impact of the conflict in Gaza.
In the October-December period, global comparable-store sales, or sales from restaurants open for at least a year, increased by 3.4 percent. This figure was below the 4.7 percent growth expected by Wall Street analysts surveyed by FactSet.
Customers in West Asia expressed dissatisfaction when McDonald’s Israel, operated by a local franchisee, announced in October that it would offer complimentary meals to Israeli soldiers. In response, some franchisees, like McDonald’s Oman, announced donations to relief efforts in Gaza.
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Last month, McDonald’s President and CEO Chris Kempczinski issued a warning, stating that misinformation in West Asia and other regions was adversely affecting sales. Alongside customer boycotts, McDonald’s found itself compelled to temporarily adjust store hours or close specific locations due to ongoing protests.
We abhor violence of any kind and firmly stand against hate speech, and we will always proudly open our doors to anyone, Kempczinski said in a LinkedIn post.
The conclusion was unforeseen for the burger giant, marking an unexpected turn in an otherwise robust year. McDonald’s reported a notable 9 percent increase in global same-store sales for 2023. The success of viral marketing campaigns, such as last spring’s Grimace shakes, along with enhanced menu offerings, contributed to a substantial 10 percent rise in full-year revenue, reaching nearly USD 25 billion.
McDonald’s was not the sole US company grappling with repercussions from the recent war. Just last week, Starbucks revealed that it, too, encountered boycotts in West Asia and other regions, stemming from perceived support for Israel.
In the fourth quarter, McDonald’s saw an 8 percent increase in revenue, reaching USD 6.4 billion, aligning with analyst expectations. Simultaneously, net income experienced a 7 percent rise, reaching USD 2 billion.
Excluding one-time items, such as a USD 66 million restructuring charge, the company outperformed analysts’ expectations by earning USD 2.95 per share, surpassing the forecasted per-share profit of USD 2.83.
McDonald’s Corp. shares were flat in pre-market trading Monday.
Continue Exploring: McDonald’s faces challenges in Middle East markets amid Israel-Hamas strife
