USA—The largest fast-food chain in the World, McDonald’s, reported a 12% decline in net income in Q2 2024 to US$2.02 billion, compared to US$2.31 billion reported in Q2 2023, amid a challenging QSR environment.
The company reported total revenues of US$6.49 billion in Q2 2024, a marginal decrease from US$6.5 billion reported in the same quarter last year.
McDonald’s also reported a slight decrease in sales to US$2.46 billion after the breakdown of revenue sources. Franchised restaurant revenue also increased modestly in the reported quarter. Ancillary income sources increased by 16% to US$89 million.
Expenses and operating costs showed mixed performance, with occupancy expenses for franchised restaurants increasing while expenses for company-owned outlets decreased.
The QSR giant also reported a 6% decline in operating income in the reported quarter to US$2.92 billion.
However, McDonald’s reported a stable operating income and increase in total revenues, despite a 4% drop in net income compared to H1 2023.
The company’s total revenues for H1 2024 recorded a 2% increase to US$12.66 billion. Operating expenses and costs increased by 4% in the reported half signaling income resilience despite unfavorable market conditions worldwide.
Net income for H1 2024 was US$3.95 billion, translating to a 2% decline in diluted earnings per share. This decline in net income was reflected in McDonald’s diluted earnings per share, which decreased by 11% to US$2.80.
McDonald’s performance is a reflection of the current state of the QSR industry, which has struggled with inflation challenges. High inflation has caused a significant increase in input and raw material costs, which have been translated to meal prices.
This led to stifled demand as customers became sensitive to pricing and value.
Chris Kempczinski, McDonald’s President and CEO, said, “We are confident that Accelerating the Arches is the right playbook for our business and as consumers are more discriminating with their spend, we are focused on the outstanding execution of delivering reliable, everyday value and accelerating strategic growth drivers like chicken and loyalty.”
Competitors like Wendy’s, Pizza Hut, and Burger King have also reported significant drops in net income and sales despite responding to the challenging market environment with value deals.
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