McDonald’s set to report financial results amid speculation it could extend $5 meal promotion

McDonald’s will report its results on July 29, amid speculation that it will extend its $5 meal promotion into August. Analysts are predicting a slight increase in revenue but a decline in net income compared with last year.

McDonald’s prepares to report financial results amid speculation it will extend its $5 meal promotion

McDonald’s is expected to report its financial results before markets open on July 29, amid speculation that the fast food giant is considering extending its $5 meal promotion launched last month into August.

According to estimates compiled by Visible Alpha (via Investopedia), analysts predict McDonald’s revenue will rise slightly to $6.63 billion from $6.5 billion in the second quarter of 2023. However, net income is expected to decline to $2.24 billion from $2.31 billion last year.

UBS analysts, who maintained a “buy” rating on McDonald’s, lowered their price target for the company from $335 to $305, citing the potential impact of inflation on second-quarter earnings. Nevertheless, analysts predicted that McDonald’s results could improve in the second half of the year as the chain’s emphasis on value draws customers back to its stores.

McDonald’s sees like-for-like sales decline, analysts confident in value-focused strategy

McDonald’s has seen comparable-store sales decline in recent quarters after a year of double-digit growth. Executives have acknowledged that inflation is affecting many consumers. In the second quarter of 2023, McDonald’s reported global comparable-store sales growth of 11.7% and growth of just over 10% in the United States.

Baird analysts are “growing confident” about McDonald’s’ potential to improve consumers’ perceptions of its value by emphasizing value in its latest advertising campaigns. That could draw consumers back to McDonald’s.

According to the researchers, “History suggests that McDonald’s can gain significant share by emphasizing value-oriented price points with its significant advertising budget.”

McDonald’s extends $5 meal promotion amid positive response to inflation-fighting impact

After spending much of the first half of 2024 figuring out the impact of inflation on sales as customers cut back on discretionary spending, McDonald’s and other restaurants have introduced cheaper meals to win back the loyalty of price-conscious customers.

Bloomberg and CNBC reported earlier this week that nearly all McDonald’s locations have agreed to extend the promotion beyond its initial four-week schedule since it began in late June. Early signs are positive.

The promotion is expected to last until August, as McDonald’s management is reportedly enthusiastic about the pace at which customers are returning to their stores. Investors can expect confirmation on the future of the promotion on July 29.

McDonald’s shares are down about 15% year to date, closing at $252 on July 26.