McDonald’s $5 meal offer provided a boost even before the E. coli outbreak.

McDonald’s scheme, designed to offset sparse traffic and falling sales among low-income consumers, was working as planned until an E. coli outbreak at the company impacted most of the internal system last week.

For example, a $5 meal deal launched in June improved the chain’s perceived value. It also attracted low-income single-user consumers, increased guest counts and generated an average check of $10, surpassing the profitability bar for franchisees. Additionally, the increase in traffic among low-income consumers marked the first time the network has achieved this figure in more than a year.

“$5 Meals does exactly what we set out to achieve. These things are coming to life,” the company’s chief financial officer, Ian Borden, said during the company’s earnings call Tuesday morning.

The $5 meal deal, coupled with strong marketing campaigns such as the Collector’s Cup, which sold out in two weeks, gave the chain significant momentum toward the end of the quarter, executives said.

“Although QSR slowed, we were encouraged by signs of progress in the third quarter—solid market share gains, particularly in the U.S., strong, compelling value platforms, menu innovations that excited customers, and strong marketing prowess that drove engagement in core products with more high profit. “,” CEO Chris Kempczinski said during the call.

However, Kempczinski admitted that the company’s performance was not good enough.

“The QSR sector has changed significantly as traffic declines across the industry and lower-income consumers are increasingly choosing to eat at home,” he said. “This trend continued into the third quarter, where QSR remained under pressure. We expected 2024 to be a difficult year, but our results this year fell short of expectations.”

McDonald’s and its franchisees are using long-term value strategies to gain more traffic and market share, including what they call EDAP (Everyday Affordable Price)—or entry-level pricing tiers to attract consumers to restaurants—combined with sales programs food. and overlaid on in-game and digital offerings.

“The combination of EDAP and set meals allows us to invest and gain recognition, so when consumers think about affordable meal options, we are top of mind. That’s the overall framework of how we think about value and learn from what works,” Kempczinski said.

We can expect such strategies to be implemented in the first quarter of 2025. We’ll also see continued marketing campaigns—collector’s cups, for example, have brought high-paying, lucrative customers into restaurants—and new menu updates. , like the October launch of Chicken Big Mac.

Notably, McDonald’s growth at the end of the third and beginning of the fourth quarter included increases in the number of visitors and spending during those visits, an increase in the number of checkouts and profitability. Borden said the U.S. market is outperforming the broader QSR segment, with PC sales and guest numbers at their highest levels since early 2023.

However, that momentum came to an abrupt end with the E. coli outbreak, which hit traffic by more than 9% in the affected markets and by 31% in Colorado, where the outbreak was most widespread. according to Placer.ai CNN reports this. Kempczinski opened the earnings call by apologizing to guests for the outbreak, adding that the company was working to build on the trust it had built before the outbreak, noting that the network’s last security compromise occurred more than 40 years ago.

“We need to be very transparent about this. We worked collaboratively and decisively with health authorities and took swift and decisive action,” he said. “I think we’ve gotten through this and are on our way back to serving customers.”

McDonald’s is shifting its focus from here, continuing its $5 meal program, releasing more menu news and driving digital engagement.

“We are prepared to do more if necessary to ensure that we bring all of McDonald’s resources to bear to re-engage our customers,” Kempczinski said. “We can make sure we communicate the steps we are taking and if there is an ongoing concern, we can address the issue while adding value and marketing updates. We have sufficient resources to pursue any business opportunity and we are ready to do so.”

McDonald’s Q3 in numbers

Global sales of competitors decreased by 1.5%

U.S. competition sales increased 0.3%, reflecting higher average checks and partially offset by slightly negative guest counts.

The international markets segment declined 2.1% due to negative sales in several markets, led by France and the UK.

The International Development License Markets segment declined 3.5% due to the war in the Middle East and negative sales in China.

Consolidated revenue increased by 3%

Systemwide sales remained flat

Contact Alicia Kelso at (email protected)