McDonald's reported weaker-than-expected sales for its third quarter, primarily due to sluggish performance in international markets like France, the UK, and the Middle East. Sales at locations open for at least 13 months fell by 1.5%, missing analysts' predictions. On the positive side, the U.S. market saw a slight increase of 0.3%.
The company continues to address declining customer traffic across all regions, largely impacted by reduced consumer spending, high inflation, and Middle Eastern boycotts of American brands. Despite these challenges, McDonald's shares rose by 0.2%. Year-to-date, the stock has increased by 0.1% compared to the S&P 500 Index's 22% rise.
In a call with analysts, McDonald's highlighted the impact of its $5 meal deal in the U.S., which improved the brand's price perception and appealed to low-income consumers, boosting traffic. CFO Ian Borden noted that this strategy has helped increase the company's share among low-income consumers for the first time in over a year.
The company's adjusted earnings per share for the third quarter were $3.23, with total sales from franchises and company-operated restaurants remaining flat. As analysts and investors look ahead to the fourth quarter, attention is focused on a recent E. coli contamination related to one of McDonald's burgers. Previously, McDonald's had pulled the affected "Mighty Angus" burger from over one-fifth of its 13,000 U.S. locations. McDonald's expects little material impact from the incident, but Citi analyst Jon Tower suggests it may hinder the company's short-term recovery.
