There was an interesting article in the FT today on McDonalds about how they had dropped sales for the first time since the start of the pandemic. The reason for that drop was obvious, so why is this quarter a loser?
The story, as is often the case in the FT, best found in the comments. McDonald’s has always had four things going for it: price, ubiquitousness, consistency, and speed. A few of those have stayed the same, and with auto checkout, perhaps even got faster. The big issue, however, is the price.
In the UK, and the US for that matter, the Golden Arches have been hit hard by inflation. $1 large fries have gone the way of the dodo. The $5 meal deal seems anachronistic. In the US, the cost of a Big Mac meal has gone up 70%, and some places in Connecticut have meals at over $18 (Houston is the cheapest metro, averaging $7.89 for a meal).
With higher prices, it is inevitable that people either go downscale (eat at home) or upscale (go to a slightly better restaurant, and enjoy better quality with only a marginally more expensive bill).
The other issue is changing tastes. Even Queen Elizabeth had been to a McDonalds before, but as options increase, and health becomes more front of mind, the glory days of McDonalds might be behind us.
My suggestion? Bring back the Indian campaign, complete with the Macaharaja Burger and the slogan, “Get it In-da-ya!”.
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