Categories
Audio Sources - Full Text Articles

McDonald’s says people are cutting back on ordering fries with their burgers as consumers tighten their budgets

mcdonalds friesMcDonald’s fries.

Erin McDowell/Insider

  • Fewer McDonald’s customers are ordering fries with their burgers.
  • The growth in the number of customers ordering delivery is also slowing down, execs said Tuesday.
  • McDonald’s is still a “beneficiary” of the slowing economy as people switch to the chain to save money, its CFO said.

Fewer McDonald’s customers are ordering fries with their burgers as people cut back on spending amid a likely looming recession, execs at the fast-food giant said at its earnings call Tuesday.

“We are seeing a slight decrease in units per transaction,” CEO Chris Kempczinski told investors. “So things like did someone add fries to their order, how many items are they buying per order, we’re seeing that go down in most of our markets around the world slightly, but it’s still going down.”

“Certainly the customer is being mindful about how they’re spending their dollar or their euro,” Kempczinski added. He said that the economic environment in Europe was “more challenging” than in the US, but that things were “looking better” than they did in the fall.

Inflation data shows that the cost of meals and snacks from limited-service restaurants in the US has risen by 7.9% over the past year. McDonald’s told investors last summer that some diners, “particularly lower-income customers,” have been trading down to value offerings and ordering fewer combo meals.

Another part of McDonald’s operations that appears to have taken a hit is delivery. Delivery is typically more expensive than eating in or ordering food to takeout because of the delivery fees added to customers’ orders.

“I think it is fair to say that the growth of delivery – whether that’s a function of it just being at a large number now or if it might, in fact, be some of the consumer pressures – but the growth of delivery has certainly slowed,” Kempczinski told investors on Tuesday.

“There is still growth, but it’s not nearly the growth that we saw previously.”

But ultimately McDonald’s is “certainly a beneficiary” of the economic uncertainty, CFO Ian Borden said, as customers with a strain on their disposable income are more likely to turn to the chain because of its low prices.

Despite customers buying less, McDonald’s US comparable sales were up 12.6% in the quarter, which it attributed to increases in both menu prices and the number of diners. Total global revenues were up 4%.

“As far as outlook for the business, we remain very confident about how we’re positioned,” Kempczinski said. “The consumer demand for our brand remains strong.”

Read the original article on Business Insider