McDonald’s has reported negative comparable sales in the UK in Q4 2024, naming the country as one of its most “challenged” markets.
Speaking on an earnings call yesterday (10 February), CEO Chris Kempczinski said the QSR giant has implemented a series of initiatives to drive performance in the UK, a market that has historically been one of its strongest performers.
“The two markets we’re spending the most time thinking about right now are the UK and Australia,” Kempczinski said. “It’s both a challenged market right now and we’re not performing to our full potential.
“Certainly the consumer [in the UK] is under pressure. There’s the cost of living issue. That’s put pressure on low-income consumers, consistent with what we’ve seen in the US.
“There are also families who are looking to economise. That has an impact on us.”
McDonald’s reported global systemwide sales of over $130bn in 2024. Global comparable sales dipped 0.1% for the full year. For Q4, global comparable sales increased 0.4%, albeit US sales decreased 1.4%.
The Q4 results reflected positive comparable sales in most markets, the company said, partly offset by negative comparable sales in some markets, led by the UK.
The news comes after McDonald’s said UK customers were “continuing to be more intentional” with spending while reporting its Q3 results, leading to a decrease in international operated markets of 2.1% during the quarter.
Initiatives to push performance this year include a strong Saver menu, the introduction of a £5 meal deal, and the Happy Meal program to engage families. Kempczinski said he is confident this value offering, combined with food innovation and strong marketing, will help McDonald’s drive momentum.
“We’re doing a lot of work with local franchisees [in the UK],” he explained. “We also need to have better marketing…frankly, we didn’t have that marketing execution in the latter half of last year.
“The momentum we’re seeing with the French business now gives me confidence we’ll get to that in the UK.”
CFO Ian Borden added that management is pleased with the improving performance of the French business, as well as Canada, Germany, and Italy.
However, he and Kempczinski highlighted “continuing inflationary headwinds” in European markets, particularly beef prices.
“But we’re confident we can drive improvement to cash flow by driving top line volumes and margins,” Kempczinski said.
In addition, McDonald’s beverage-focused spinoff concept CosMc’s – introduced last year – provides a new opportunity for growth. The brand is on the lookout to add sites in Texas, where it has been piloting the concept.
“There’s lots of opportunity in beverages – that category has been growing about 2x the rest of the business,” Kempczinski continued. “The learnings continue. We’re closing stores, and adding stores.
“Smaller units tend to perform better, and you want a drive-thru as well. As we refine our plans, you’ll hear more about how much potential there is to capture with new units vs existing restaurants.”
Looking ahead, Borden and Kempczinski reported a “sluggish start” to the year, with the QSR industry remaining “pressured.” Despite a comparatively resilient middle- and high-income customer, low-income consumers remain pressured, but the business seeks to underscore its value credentials.
It also sees opportunity to gain share in the chicken market by the end of the year. A new chicken strip offer will be launched in the US, while the McCrispy will be rolled out to all markets.
“We expect a gradual stabilisation of the macroeconomic and consumer environment this year,” Borden said. “If the underlying environment improved beyond our expectations, particularly lower income consumers, we would expect to benefit disproportionately.”
Last month, McDonald’s UK boss Alistair Macrow appeared at a hearing with the Business and Trade Committee due to fresh allegations of bullying and sexual harassment at the company. 700 people are bringing legal action against the business, with 300 cases reported to the EHRC and 160 cases reported to the BBC.
Macrow said the business has enacted “significant change” in tackling abuse, describing a cultural action plan which guarantees its ability to “detect, deter and to deal with any forms of harassment in our business”.
Earlier this month, a British Medical Journal investigation found that McDonald’s has successfully overturned multiple council planning refusals in the UK by citing its healthier menu options and community contributions in appeals.
McDonald’s said it works closely with local authorities throughout the planning process and aims to be a positive presence in communities.
