The results are in. McDonald’s latest earnings report sheds light on industry traffic trends that point to the growing divide among U.S. consumers—as the wealthiest Americans continue to spend and eat out while lower-income families are dining in amid the rising cost of living, skyrocketing food prices, and stagnant wages.
A look at McDonald’s third-quarter earnings, released Tuesday after the closing bell, shows the fast-food giant’s U.S. same-store sales increasing 2.5% over the same period last year (up 3.6% globally)—but missing analyst expectations with adjusted earnings per share (EPS) coming in at $3.22, 10 cents under expectations of $3.32, on $7.1 billion in revenue.
Shares in McDonald’s (MCD) were up nearly 3% in afternoon trading on Wednesday, at the time of this writing.
Dig deeper and the numbers show the growing economic disparity among Americans customers.
“We continue to see a bifurcated consumer base with QSR [quick-service restaurant] traffic from lower-income consumers declining nearly double digits in the third quarter, a trend that’s persisted for nearly two years,” McDonald’s president and CEO Chris Kempczinski said during Wednesday’s earnings call. “In contrast, QSR traffic growth among higher-income consumers remains strong, increasing by nearly double digits in the quarter.”
In an effort to deliver sustainable growth in this “challenging environment,” Kempczinski said “the company would be delivering everyday value and affordability, menu innovation, and compelling marketing that continue to bring customers through [the] doors.”
To that end, Kempczinski said on the earnings call that McDonald’s has been bringing back extra-value meals—with a $5 Sausage, Egg & Cheese McGriddles meal, and an $8 10-piece Chicken McNuggets meal, in November. Last month, McDonald’s reintroduced the promotional game Monopoly in the U.S., for the first time in nearly a decade, with a focus on digital engagement.
