McDonald’s plans to step up deals and value messaging to combat slowing sales.

McDonald’s is also planning to roll out a larger burgers, first testing them in 20 markets, including outside the U.S., said Chief Financial Officer Ian Borden Wednesday at the UBS Global Consumer and Retail Conference, Restaurant Business reports.

McDonald’s hopes to offer the bigger hamburgers at its more than 41,800 restaurants before the end of 2025, Borden said.

“The opportunity is significant for a large, more satiating burger,” Borden said.

McDonald’s has long tried, and failed, to launch a premium burger, including the classic McDLT, the Arch Deluxe and the Angus third-pounder burger. None remained on the chain’s menu for longer than a few years, as the Golden Arches chased the success of such competitors as Shake Shack, Five Guys, Culver’s and Freddy’s.

The key this time is simply offering a bigger hamburger, Borden said, which a substantial percentage of the fast-food public wants.

“In the past, you would have seen us try and get after that opportunity in 20 different markets in 20 different ways,” the CFO said. “And then you don’t have the ability to build a global equity that you can drive at scale.”

The Chicago burger giant said inflation-weary customers are eating out less often in many big markets. In the first quarter, fast food traffic was flat or down in the U.S., Australia, Canada, Japan, the United Kingdom and Germany.

“The consumer is certainly being very discriminating in how they spend their dollar,” Kempczinski said Tuesday during a conference call with investors. “It may be more pronounced with lower-income consumers, but its important to recognize that all income cohorts are seeking value.”

McDonald’s said its same-store sales – or sales at stores open at least a year — rose 1.9% worldwide in the January-March period. That was below Wall Street’s forecast of a 2.1% increase, according to analysts polled by FactSet.

McDonald’s had warned investors that the exceptional post-pandemic growth it saw would likely slow this year. Still, the same-store sales increases the company posted in the first quarter were lower than the 3% to 4% McDonald’s usually sees in a typical year.

In the U.S., same-store sales rose 2.5% in the first quarter, but that was largely due to price hikes carried over from last year.

Kempczinski checked his McDonald’s app during the call and noted that there were multiple deals available in his area, including one Big Mac for 29 cents when you buy another. And Kempczinski said 90% of U.S. restaurants are offering meal bundles for $4 or less.

But Kempczinski said McDonald’s needs a nationwide value message and marketing to back it up. In some areas, it’s losing out to competitors on customers’ perception of value and affordability, he said. Wendy’s is currently offering free fries with the purchase of a medium burger, for example.

“There’s a lot of great value out there, but everyone else has a value message too,” Kempczinski said.

McDonald’s said its revenue rose 5% to $6.17 billion in the January-March period. That was in line with Wall Street’s estimates.

Net income was up 7% to $1.93 billion. Earnings, adjusted for restructuring charges, were $2.70 per share. That was short of analysts’ forecast of $2.72.

McDonald’s shares were flat in morning trading Tuesday.

With reporting by Newsmax Finance


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