U.S. comparable sales grew 0.8%, below 1.06% estimates, as Kempczinski blamed weak execution on value deals and digital promotions.
McDonald's second-quarter sales missed analyst estimates, with executives blaming weak execution of a value-focused strategy aimed at winning back lower-income customers. The company's comparable sales in the U.S. grew 0.8%, short of the 1.06% analysts expected, according to LSEG data. A year earlier, U.S. growth ran at 2.5%.
CEO Chris Kempczinski said the shortfall was not a strategy problem but an execution failure. Poor promotion of value deals and a pullback in digital promotions like buy-one-add-one offers drove a drop in visits from loyal customers. That accounted for roughly two-thirds of the missed traffic target, he said on the earnings call.
"We don't have a strategy problem. We simply didn't execute at the level we needed to in the second quarter," Kempczinski said.
About one-third of McDonald's U.S. restaurants did not follow the company's guidance on everyday affordable pricing, the CEO added. The company plans to educate franchisees on compliance with the pricing scheme and factor it into business reviews.
Kempczinski also said restaurant teams were overwhelmed by the number of operational changes McDonald's pushed through in the quarter. That hurt efficiency and slowed customer service times. Marketing programs also fell short of expectations.
CFO Ian Borden said the company will launch more national digital flash offers starting next week to "reenergize our high-frequency customers." McDonald's also plans to target its most loyal customers with more personalized digital offerings. The company is already cutting several non-customer-facing activities to simplify restaurant operations, Borden said.
McDonald's named Skye Anderson to lead its U.S. business, betting on an executive with 26 years at the company, including time as U.S. chief operating officer. She will oversee roughly 14,000 U.S. restaurants and guide the turnaround.
On Fox Business's "Mornings with Maria," guest Mitch Roschelle said inflation is squeezing lower-income consumers, forcing them to pull back on fast-food spending. McDonald's stock page carries an Alpha Score of 45 out of 100, a Mixed rating in the Consumer Discretionary sector.
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