In 2024, McDonald's encountered numerous challenges. An E. coli incident further exacerbated their difficulties.
In the final quarter of 2024, sales at U.S. McDonald's outlets opened for at least a year dipped by 1.4%, contrasting the 4.3% surge observed in the same period the previous year. This downturn added to an already challenging year for the fast-food giant, as its value proposition took a hit among thrifty consumers who opted for other eateries instead.
The latest earnings statement sheds light on the adverse impact of an E. coli outbreak, which affected more than 100 individuals across numerous states, ultimately leading to several lawsuits against the corporation. The likely culprit was the raw yellow onions used in Quarter Pounders, with the Centers for Disease Control declaring the outbreak to be over in November.
To draw customers back, McDonald's invested $100 million in marketing efforts during the quarter and announced the launch of a new value menu in January, aiming to revitalize sales. The menu, dubbed "McValue," was designed to revive growth after several quarters of poor performance, attributed largely to consumers' perceptions about rising prices. Since 2019, the average cost of menu items has increased about 40%. However, McDonald's asserts that these price hikes are in synchronization with its escalating expenses.
Despite continuing struggles in the U.S., quarterly international sales surged by 4.1% at McDonald's development markets, especially in the Middle East, where the American brand had previously faced boycotts and backlash.
McDonald's (MCD) stock has gained nearly 2% compared to a year ago, indicating some resilience in the face of these challenges.
Although the E. coli outbreak and pricing sentiment were critical factors in the fourth-quarter sales decline, McDonald's has taken several measures to recover:
- Promotional Campaigns: The successful implementation of a $5 value meal in June was followed by its extension till December, which helped maintain traffic levels.
- Menu Innovations: New menu items like chicken tenders and snack wraps were introduced, aiming to boost foot traffic and attract customers with fresh options.
- Loyalty Program: With annual sales reaching $30 billion, the loyalty program experienced a robust 30% year-over-year growth, emphasizing the importance of digital engagement for future growth and customer retention.
- Marketing Initiatives: Effective marketing strategies like the Boo Buckets promotion and the introduction of the Chicken Big Mac contributed to driving sales and customer engagement.
Despite the challenges encountered in 2024, McDonald's is actively working on restoring its performance through strategic promotions, menu innovations, and digital engagement.
To further boost sales and attract customers, McDonald's is planning to expand its business in the food delivery sector. They aim to collaborate with popular food delivery services to make their menu more accessible.
Recognizing the importance of providing a diverse food selection, McDonald's is also considering introducing vegetarian and vegan options to cater to the growing demand for plant-based food options.