McDonald’s revenue misses estimates as Middle East conflict weighs on quarterly sales

McDonald’s reported mixed quarterly results Monday as turmoil in the Middle East took a toll on its sales in those markets.

Shares of the company fell less than 1% in premarket trading.

Here’s what McDonald’s reported compared with what Wall Street was expecting, based on a survey of analysts by LSEG, formerly known as Refinitiv:

• Earnings per share: $2.95 adjusted vs. $2.82 expected
• Revenue: $6.41 billion vs. $6.45 billion expected

The fast-food giant reported fourth-quarter net income of $2.04 billion, or $2.80 per share, up from $1.9 billion, or $2.59 per share, a year earlier.

Excluding the write-off of software that’s no longer in use, restructuring costs and other items, McDonald’s earned $2.95 per share.

Net sales rose 8% to $6.41 billion.

The chain’s global same-store sales grew 3.4% in the quarter, falling short of StreetAccount estimates of 4.7%, as its Middle Eastern sales struggled.

The international developmental licensed markets segment saw its same-store sales increase just 0.7%. McDonald’s said the division’s sales lagged as a result of the Israel-Hamas war.

“The Company is monitoring the evolving situation, which it expects to continue to have a negative impact on Systemwide sales and revenue as long as the war continues,” McDonald’s said in a regulatory filing.

All other markets in the segment, like China and Japan, reported positive same-store sales growth for the quarter.

Domestic same-store sales rose 4.3%, about in line with expectations, helped by menu price hikes. The company also credited effective marketing and digital sales growth.

In the third quarter, McDonald’s said its U.S. traffic fell as low-income consumers pulled back their spending. It was the first sign that diners were beginning to shy away from the chain’s higher prices. McDonald’s has also been rolling out an improved version of its burgers nationwide, as it tries to convince customers that its prices are worth it.

The company’s international operated markets segment, which includes Canada, Australia and Germany, reported same-store sales growth of 4.4%, shy of StreetAccount estimates of 5.1%. Same-store sales shrank in France, however.

For 2024, McDonald’s reiterated its forecast from December that new restaurants will increase its systemwide sales growth by nearly 2%, excluding currency changes. The chain plans to open more than 2,100 new locations this year as part of a broader strategy to accelerate its expansion and reach more customers.

The company also said it will spend between $2.5 billion and $2.7 billion this year on capital expenditures. More than half of that money will go toward opening new restaurants in the U.S. and its international operated markets.