Dive Brief:
- McDonald’s U.S. increased comparable sales by 6.8% during the fourth quarter and 2% for the year, according to an earnings release. McDonald’s has now posted three consecutive quarters of same-store sales growth.
- Comparable sales, which performed better than expected, were up in the quarter largely due to positive check and guest count growth, with marketing initiatives and its value menu supporting “steady improvement in our baseline momentum,” CFO Ian Borden said Wednesday during an earnings call.
- The chain’s Extra Value Meals, which relaunched in September, and other value offerings have helped boost incrementality and improved the QSR’s value perception, which flagged in late 2024 as consumers viewed its offering as too expensive.
Dive Insight:
McDonald’s has put significant work into its value strategy, including evaluating franchising standards to ensure that operators are offering value and appropriate pricing across the system. It initially saw traction following its summer 2024 launch of its $5 Value Meal that helped turn comps positive during Q3 2024. Momentum would have likely continued into early 2025, but an E. coli outbreak led to sharp declines in traffic and sales in Q4 2024.
“McDonald's is not going to get beat on value and affordability,” McDonald’s CEO Chris Kempczinski said. “It's in our DNA, and we will remain agile to respond as appropriate to a dynamic competitive landscape.”
In January 2025, McDonald’s launched McValue that drove “immediate incrementality,” Kempczinski said Wednesday during an earnings call. He added that the Extra Value Menu performed exactly as management had hoped.
“Together with McValue and marketing, we gained share with low-income consumers in December, and we've seen a meaningful increase in our value and affordability scores,” he said.
The Extra Value Meals also led to improvements in units sold for top meals. It also saw strong performance from its nationally priced $5 and $8 meals that it offered in November and January.
“We remain on track to achieve our targets for incremental traffic associated with the EVM relaunch,” Borden said.
Franchisees have also been providing better value offerings throughout the year and seeing cash flow grow year over year, Kempczinski said.
BTIG analyst Peter Saleh wrote in a Feb. 2 report that years of offering deep value options is finally starting to pay off, improving the chain’s overall positioning.
“We view McDonald's as one of the strongest restaurant concepts in the world that is now in the early innings of the lower-income consumer recovery,” Saleh said. “The company was able to generate several years of outsized sales growth in the U.S. and most major markets amid the recovery from COVID disruption owing to relevant menu offerings, restaurant upgrades, digital engagement and stronger leadership.
