Budget-conscious Americans are returning to McDonald’s as the fast-food giant doubles down on value meals, discounted bundles and limited-time promotions aimed at stretching diners’ dollars.
The strategy appears to be working as U.S. sales rose 6.8% in the fourth quarter – the biggest jump in about two years – and lower-priced offers and aggressive promotions drove traffic back into restaurants. Analysts had expected a smaller 4.9% gain.
McDonald’s CEO Chris Kempczinski said there is growing evidence the company’s value push is working, particularly among lower-income consumers who have been most affected by inflation.
Holiday promotions also played a role in pulling customers in. Last December, McDonald’s launched a Grinch-themed meal that the company said delivered “the highest single sales day in history.”
MCDONALD’S OFFERS FREE MCNUGGET CAVIAR KITS FOR VALENTINE’S DAY CELEBRATION
The company revived its Monopoly promotion in October after nearly a decade and rolled out value offers starting at $5 in November.
Industry analysts say consistency will be key as consumers remain selective about where they spend.
McDonald’s strategy is notable given how many U.S. restaurants in the U.S. are struggling to maintain foot traffic. Across the industry, lower-priced chains have generally fared better than higher-priced competitors as consumers trade down.
Taco Bell posted a 7% increase in same-store sales in the latest quarter and KFC reported 3% growth, parent company Yum Brands said last week. Meanwhile, higher-priced Chipotle Mexican Grill reported a 1.7% decline in sales earlier this month.
The renewed customer momentum helped power stronger-than-expected financial results, underscoring how discount-driven traffic can translate into profits.
The traffic rebound translated into stronger financial results. McDonald’s global comparable sales rose 5.7% in the fourth quarter, topping expectations, while adjusted earnings beat Wall Street estimates as revenue climbed to more than $7 billion. International markets also contributed to growth, with steady demand in Britain, Germany and Australia.
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Looking ahead, McDonald’s plans to build on its affordability messaging while expanding into beverages such as cold coffees, crafted sodas and energy-style drinks — offerings designed to drive additional visits, particularly among younger consumers. A new McCafe-branded drink lineup is set to roll out in the U.S. and select international markets this year after a 500-store test exceeded expectations.
Reuters contributed to this report.
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