McDonald’s Q4 Earnings: U.S. Sales Drop Following E. Coli Outbreak – WSJ
McDonalds has an uneven 2024 sales year. Currently they are trying to discover why there has been a drop in sales, and as of now they are thinking it is because the meal prices have gotten higher. In July Mcdonalds reported the first drop in same store sales since 2020. In 2020 Mcdonalds dropped because of the corona virus where people were not allowed to come into work for awhile. This past October there was an E. coli breakout on the onions that Mcdonalds uses for their Quarter Pounder burgers. This affected 104 people across 14 different states 34 of the people were hospitalized including one death. However, McDonald’s did take quick action with this and stopped resourcing their onions from that facility and related farms. McDonalds pledged to invest $100 million to help from the outbreaks. The outbreak has supposedly oppressed the company’s cash flow by $200 million. Since the outbreak McDonalds has been trying to come back one thing, they are currently implementing is a broader value menu and cheaper food options. They have also added more to their one-dollar menu. Mcdonalds said that they expect to be fully recovered from this incident by the spring, however critics think otherwise since it is such a quick turnaround. On the bright side, McDonalds has been booming outside of the United States specifically in Middle East and Japan. Global same-store sales increased 0.4%, a better result than analysts had expected. I think in general it is a good idea for McDonalds to add more to their value menu and one dollar menu since McDonalds is known for their low prices and being affordable in general. Over the past few years their prices have skyrocketed where it is almost the same price to go somewhere else such as chick-fil-a who might have better food than McDonalds anyways. I think McDonalds needs to focus on their prices and how they are seen, especially after the E. coli outbreak, getting their image back up.
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I think it’s interesting to see how different businesses might respond in their sales efforts to situations which are totally out of their control, such as a global pandemic or an E. Coli outbreak. I do agree with you though that low pricing is one of McDonalds biggest selling points, and they should try to continue with that as much as possible. At the same time, I could see how it would be harder now for McDonalds to keep their prices down than it used to be. Great post!
McDonald’s is definitely known for their low prices, and I have also noticed the increases since Covid. I think they should focus on that, while continuing to limit outbreaks like E. Coli, because that gives them a really bad reputation.