With more than 40,000 locations across the globe and the highest sales out of any fast-food chain, McDonald’s persistent success is undeniable. But even as the chain continues to dominate the industry, there’s one part of its business where things aren’t quite as peachy: traffic.
On Oct. 30, the fast-food giant reported its earnings for the third quarter of 2023, beating analyst expectations on both revenue and same-store sales. In a statement, McDonald’s CEO Chris Kempczinski touted that the third quarter results “reflect our position of strength as the industry leader.”
But not all figures were positive for McDonald’s this past quarter. The company revealed during an earnings call with investors that customer traffic for the period had declined slightly. Per CNBC, this was the first quarter of 2023 where McDonald’s saw a drop in traffic.
The reason for the decline? It all has to do with the lower-income McDonald’s customers. Consumers who make less than $45,000 per year have frequented fewer restaurants across the entire industry due to higher prices and interest rates.
“We’re just going to need to continue to keep a close eye on that $45,000 and under consumer because of the pressure that they’re feeling there and make sure that we’re offering value, but hopefully the industry stays disciplined as well on pricing,” Kempczinski said.
Chief financial officer Ian Borden confirmed that McDonald’s raised its prices during the third quarter, albeit at a lower rate than it has in previous quarters. He also noted that McDonald’s expects its total price increases in the United States to be just over 10% in 2023, but claimed that the company has been implementing those increases in a way that has “minimized the resistance from the customer.”
As Americans continue to see inflation decline after years of soaring prices, McDonald’s expects its prices to come down as well. The company is also putting extra emphasis on its deals and value offerings for customers. Last week, for example, the chain announced a promotion that will give customers a free medium order of fries when they spend $1 every Friday for the rest of the year.
“We are focused on maintaining our value leadership. And we’re going to do what we need to do to maintain our value leadership,” Kempczinski said.