With More People Eating Home-Cooked Meals, What If They Stop Eating Hamburgers?... McDonald's CFO Calls It a "Crisis Situation"

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Ian Boden, Chief Financial Officer (CFO) of McDonald's, expressed concerns about the worsening business environment for McDonald's, noting that the main consumer demographic is reducing visits to fast food outlets and starting to cook at home. McDonald's, which had already seen a significant slowdown in sales growth in the Middle East since October last year due to clashes between Israel and the Palestinian militant group Hamas, is most worried about consumer contraction caused by prolonged inflation.

According to CNN on the 13th (local time), CFO Boden attended an investor conference and said, "The consumer environment is very difficult right now. Major consumers have nearly exhausted the savings they accumulated during the COVID-19 period and are pressured to reduce spending due to high inflation and interest rates." He also pointed out, "Especially for low-income consumers, the high cost of dining out has led them to cook and eat at home more frequently."

Although the inflation rate recently dropped to the low 3% range, the rise in dining-out prices remains high, causing consumers to reduce their visits to fast food restaurants. In fact, the U.S. Department of Labor reported that last month’s U.S. Consumer Price Index (CPI) rose 3.2% year-over-year, but while housing prices increased by 1%, dining-out prices rose by 4.5%.

CFO Boden emphasized that, considering the burden on consumers, McDonald's will continue to focus on marketing low-priced products. He stated, "High cost-effectiveness is the core of our brand, and low-income consumers expect more reasonable price options and great value from our brand." He added, "Currently, over 90% of our outlets in the U.S. offer products priced under $4."

The boycott movement against U.S. brands following the clashes between Israel and Hamas has also led to a sharp decline in sales in the Middle East region. In the fourth quarter of last year, McDonald's global store sales grew 3.4% year-over-year, with U.S. stores growing 4.3% and overseas stores 4.4%, both in the 4% range. However, the market including about 1,700 stores in the Middle East recorded only 0.7% growth, contrasting sharply with the 16.5% sales growth of those stores in 2022.

McDonald's plans to offset this consumer contraction and weakening sales growth in the Middle East by making up for it in the U.S. market. CFO Boden emphasized, "First, it is important to build a solid foundation. Growth can accelerate at any time." He added, "While the U.S. population grew by 11% over the past decade, we have seen growth in the 4% range, so there is ample opportunity to expand in a broader way."

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