McDonald’s faces profit disappointment amid cost-conscious consumers and conflict in the Middle East

McDonald’s, the US fast food giant, is struggling with profit declines as CEO Chris Kempczinski underlines growing financial caution among consumers and the impact of conflict in the Middle East on its global business.

In the latest quarter, McDonald’s reported modest 1.9 percent growth in comparable sales, which fell short of Wall Street expectations. Sales in the United States rose by 2.5 percent, driven by price increases, albeit considerably lower than the 12.6 percent increase last year.

Despite implementing menu price adjustments to combat rising ingredient costs, McDonald’s continues to face challenges in meeting the budgetary constraints of its lower-income customer base.

The impact of the conflict in the Middle East is reflected in McDonald’s licensees’ international sales, which saw a decline of 0.2 percent. This downturn, which is attributed to ongoing hostilities in the region, offsets positive sales trends in other key markets such as Japan, Latin America and Europe.

While total revenue for the first quarter rose 5 percent to $6.2 billion, contributing to quarterly net income of $1.93 billion, CEO Kempczinski recognizes the increased discernment among consumers amid higher prices in everyday expenses, which puts extra pressure on the fast restaurant. industry.

Earlier warnings from the group’s finance chief, Ian Borden, about falling international sales due to tensions in the Middle East and economic sluggishness in China are proving prescient. Kempczinski highlights the “meaningful business impact” of the conflict, exacerbated by misinformation surrounding the brand.

McDonald’s joins a cohort of Western brands facing boycotts over alleged ties, especially after announcing support for Israeli causes. In a similar vein, Starbucks has revised its annual sales forecasts in response to lower sales and footfall at stores in the Middle East.

While McDonald’s struggles with profit challenges, other fast-food chains such as Restaurant Brands International and Domino’s Pizza are showing resilience. Burger King’s owner is exceeding expectations, buoyed by a revival in demand at its outlets, while Domino’s is benefiting from promotional offers on its pizzas.

Founded in 1940 by Dick and Mac McDonald in California, McDonald’s has grown into a global brand with more than 40,000 points of sale in 100 countries. With a market value of $197 billion, McDonald’s shares closed marginally lower at $273.06 in New York, reflecting the industry’s challenges amid changing consumer behavior and geopolitical tensions.