McDonald's, the renowned fast-food chain, experienced a slight setback in the last quarter of the year due to the war in Gaza, causing a dip in sales across multiple markets. Despite a generally positive year, the impact of the conflict had a tangible effect on McDonald's global same-store sales in the October-December period, with a rise of 3.4%, falling short of the expected 4.7% increase predicted by Wall Street analysts.
The Middle East market, in particular, experienced customer discontent after McDonald's Israel, operated by a local franchisee, announced its decision in October to provide free meals to Israeli soldiers. In response, several franchisees, including McDonald's Oman, pledged donations to relief efforts in Gaza. These actions resulted in customer boycotts and protests, leading some McDonald's locations to temporarily close or limit their operating hours.
McDonald's President and CEO, Chris Kempczinski, attributed the dip in sales to misinformation circulating in the Middle East and other regions. In a LinkedIn post, Kempczinski firmly stated that the company denounces all forms of violence, stands against hate speech, and is always ready to welcome anyone through its doors.
Despite this unexpected hurdle, McDonald's had an overall successful year. The introduction of viral marketing campaigns, such as last spring's popular Grimace shakes, and menu upgrades contributed to a remarkable 9% increase in global same-store sales in 2023. These achievements translated into a 10% boost in full-year revenue, reaching nearly $25 billion.
Interestingly, McDonald's was not the only US company to face backlash due to the conflict in Gaza. Starbucks, a well-known coffeehouse chain, also reported boycotts in the Middle East and other regions based on a perceived support for Israel.
In the fourth quarter of 2023, McDonald's revenue rose by 8% to $6.4 billion, meeting analyst expectations. Moreover, the company's net income saw a 7% increase to $2 billion. Adjusting for one-time items, such as a $66 million restructuring charge, McDonald's earned $2.95 per share, surpassing analysts' forecasted profit of $2.83 per share.
While the news of the dip in sales impacted McDonald's stock, causing a 1% decline in early trading, the company's ability to adapt and overcome challenges has been a hallmark of its success. With a strong foundation and a persistent drive to meet customer needs, McDonald's is expected to navigate through these challenges and continue to thrive in the global fast-food industry.
