McDonald’s profits down 12% as low-income families tighten budgets with chain hoping $5 deal can save sales

The fast-food giant began offering $5 meal deal in June

McDonald’s profits dropped 12 percent over the last year. Now, the fast food restaurant is looking to extend their new $5 meal deal (Copyright 2023 The Associated Press. All rights reserved)

McDonald’s saw a drop in profits over the last year as more and more families opt to eat at home to save money. Now, they’ve introduced a $5 meal deal with the hopes of earning more cash.

The fast-food giant reported a 12 percent drop in net income from June 2023 to June 2024. This drop came after low-income customers cut visits due to inflation forcing many to tighten their budgets, CEO Chris Kempczinski said, according to the Wall Street Journal.

McDonald’s introduced a meal deal in many restaurants across the US in June, allowing customers to buy a McDouble or a McChicken along with small fries, four-piece McNuggets and a small fountain drink for $5.

The deal was originally set to last through July but many locations now plan to extend it into August in hopes of driving sales, Fox Business reports.

McDonald’s profits dropped 12 percent over the last year. Now, the fast food restaurant is looking to extend their $5 meal deal (Copyright 2023 The Associated Press. All rights reserved)

Sales at McDonald’s locations fell 1 percent worldwide between April and June, marking the first decline since the end of 2020.

“The hallmark of a great company is its ability to perform in good times and bad, and we are resolved to reignite share growth in all our major markets, regardless of the prevailing market conditions,” Kempczinski said, according to Fox Business.

While inflation is beginning to ease, it’s still driving up prices across industries and forcing consumers to tighten budgets to afford necessities. Grocery prices are up by 21 percent on average, Associated Press reports.

Kempczinski and other executives have even admitted that customers think prices are too high — and that McDonald’s is trying to address that concern, CNBC reports.

“At the end of the day, we expect customers will continue to feel the pinch of the economy and a higher cost of living for at least the next several quarters in this very competitive landscape,” Joe Erlinger, McDonald’s US president, said. “So we believe it is critical for us to consider these factors in order to grow market share, and return to sustainable guest count-led growth for the brand.”

As McDonald’s continues its $5 meal deal, other restaurants and stores are trying similar strategies to bring in customers.

Burger King announced its own $5 meal deal earlier this year. In response to McDonald’s’ deal, Wendy’s announced its own $3 breakfast.

Target announced in May it is cutting prices on some 5,000 items, including grocery essentials like milk, meat and bread, NPR reports. A poll from the same month indicated some 80 percent of Americans now consider fast food to be a luxury purchase.

Many Americans are now also buying store-brand products, rather than name-brand, in an effort to save money.