McDonald’s Tells Operators That Consumers Increasingly Seek Value

McDonald’s reportedly urged restaurant operators to remain focused on value in a drive to reverse declining guest counts.

In a memo to operators delivered after the company’s third quarter earnings report, McDonald’s U.S. President Joe Erlinger said the brand’s focus on value over the past year has it “moving in the right direction,” CNBC reported Thursday (Nov. 6), citing a copy of the memo.

McDonald’s did not immediately reply to PYMNTS’ request for comment.

When the company reported its third quarter results, its U.S. same-store sales were up more than expected, according to the report. CNBC attributed the rise to the company’s introduction of Extra Value Meals and the $2.99 Snack Wrap.

However, McDonald’s also reported earnings per share and revenue that were below Wall Street expectations, the report said.

Erlinger said in his memo, per the report, that while the comp guest count was up, the overall guest count continued to decline.

He said this underscores “the need for disciplined pricing, value and affordability,” according to the report.

In a separate memo to global operators, McDonald’s CEO Chris Kempczinski said the brand will maintain its focus on “sharpening value leadership to meet evolving consumer expectations and increase traffic,” per the report.

It was reported in October that younger consumers were cutting back on their trips to restaurants due to the challenges they face in the labor market.

Executives from fast-casual restaurant chains Chipotle and Shake Shack said during earnings calls that the industry was being impacted as these consumers cut back on their spending.

It was reported in August that American restaurant chains were seeing declining sales as consumers stayed at home.

At that time, IHOP and Applebee’s parent Dine Brands, Sweetgreen, Wendy’s and Denny’s all said during earnings calls that consumers’ reluctance to spend was hindering sales.

Also in August, it was reported that fast food chains were seeing a decline in their breakfast business because Americans were cutting back on spending.

Executives from Wendy’s and McDonald’s said the companies’ breakfast business was doing worse than other times of the day, despite the discounts they offered, with one saying breakfast is often the first meal consumers choose to eat at home when there is an increase in economic uncertainty.