McDonald’s said higher US sales in the first quarter helped it overcome weakness in the Middle East and other markets where consumers have been boycotting the brand
McDonald’s has reported weaker-than-expected Q1 results as boycotts have impacted sales.
Despite higher US sales in the first quarter, the fast-food giant struggled with weakness in the Middle East and other markets where consumers have been boycotting the brand. The Chicago-based burger fast food chain revealed that its same-store sales, or sales at stores open for at least a year, rose 1.9% globally in the January-March period.
This was below Wall Street’s forecast of a 2.1% increase, according to analysts polled by FactSet. In the US, same-store sales increased by 2.5% as the company hiked prices and saw a surge in demand for delivery.
However, sales dipped by 0.2% in McDonald’s international franchised markets. This marked the first time since 2020 that same-store sales have dropped in this area. Customers across the Middle East and in Muslim-majority markets like Indonesia and Malaysia have been boycotting McDonald’s for months over its perceived support for Israel.
The boycotts began in October after McDonald’s local Israeli franchisee announced it was providing free meals for Israeli troops involved in the Gaza war. To limit the fallout, McDonald’s announced in early April that it was purchasing Alyonal Limited, its Israeli franchisee, and taking control of the country’s 225 restaurants.
The financial terms of the deal were not disclosed. McDonald’s stated that its revenue increased by 5% to $6.17billion in the January-March period, which was in line with Wall Street’s estimates. Net income rose by 7% to $1.93billion. Earnings, adjusted for restructuring charges, were $2.70 per share, falling short of analysts’ forecast of $2.72 McDonald’s shares dropped 1.5% in premarket trading on Tuesday.