McDonald’s faces backlash as rising menu prices spark customer outrage. CEO Chris Kempczinski addresses concerns.
McDonald’s CEO Chris Kempczinski has addressed the criticism from customers who are unhappy with the rising prices of the fast food chain’s menu items.
McDonald’s growth is slowing down due to boycotts and losing “low-income” customers. The company says some people are protesting its support for IDF soldiers in Israel, while others are eating at home because they earn less than $45,000 a year. The company also faces backlash for charging $18 for a combo meal, which some say is too pricey for fast food.
Many customers have expressed their dissatisfaction on social media, posting receipts that show how much they have to pay for their orders.
One customer shared a photo of a receipt that showed a bill of over $20 for two Egg McMuffins and another breakfast sandwich, and asked, “What has the world come to?”
The fast food giant explains on its website that its prices are determined by its franchisees, who have to adjust them according to the costs and demand in their markets.
However, this has also affected McDonald’s sales, which saw a lower-than-expected growth in the last quarter. While analysts had predicted a 4.7 percent increase in sales, McDonald’s only reported a 3.4 percent growth.
Middle East conflict and cost challenges hit McDonald’s
One of the reasons for this slowdown was the conflict in the Middle East, which had a negative impact on the overseas franchises of McDonald’s. But Kempczinski also acknowledged that the cost factor was a challenge, and said that the company would focus more on ‘affordability’ in the coming year.
In an earnings call with analysts on Monday, 5 February, he said, “I think what you’re going to see as you head into 2024 is probably more attention to what I would describe as affordability
He also revealed that customers with low incomes, earning less than $45,000 per year, were ordering less from McDonald’s, and opting to eat at home more often, as the price of groceries went down.
Eating at home has become more affordable,” he said.
“The battleground is certainly with that low-income consumer.”
But the company’s chief financial officer, Ian Borden, told analysts that the situation would not improve significantly until the Middle East conflict was resolved.
Meanwhile, restaurant analyst Mark Kalinowski said that McDonald’s would still have to raise its prices, albeit at a slower rate of 2 to 3 percent over the next year. He said that McDonald’s would try to lure customers with special offers on its mobile app.
App discounts will be a big part of their arsenal,” he said.
The disappointing results of McDonald’s last quarter also affected its stock price, which fell by nearly 4 percent to $285.97 on Monday.
This article was published on Hindustantimes News!
