By Angela Palumbo
McDonald’s has been feeling the pressure as more people shift to grocery shopping as opposed to eating at restaurants. The fast-food chain has several plans to keep customers coming in for its Big Macs and Chicken McNuggets.
During a presentation at the UBS Global Consumer and Retail Conference on Wednesday, fast-food giant McDonald’s noted a shifting trend of customers that has negative implications for the business.
“You’re starting to see food at home inflation versus food away from home getting back to its more, I think, historical dynamic, which means I think some of those consumers are just choosing to eat at home more often,” said Chief Financial Officer Ian Borden.
According to the U.S. consumer price index for February, prices for food at home have increased 1% over the last 12 months while prices for food away from home have jumped 4.5%.
Consumers also are facing higher interest rates and reduced savings from stimulus checks they received during the pandemic, Borden added. He said that it’s “likely this year that we’re going to see negative traffic from a broad standpoint, from an industry standpoint, because of those dynamics.”
This isn’t the first time investors are hearing that McDonald’s customers have been pulling back. McDonald’s said on its fourth-quarter earnings call in February that after it increased menu prices to offset higher inflation costs, lower-income consumers — which tend to be the company’s primary customers — started to reduce their transaction sizes.
McDonald’s has a plan to excite its customers, though. This includes increasing the sizes of its burgers, focusing more on chicken products, and improving the company’s coffee offerings.
“The opportunity is for a large, more satiating type burger. That opportunity is significant,” Borden said. He added that McDonald’s will be launching new beef products in several markets under a pilot program. Borden also said McDonald’s has seen how successful its chicken offerings like the McCripsy and McChicken have been, and it plans on increasing its share in the chicken space.
Borden added that “we are not happy with our progress in coffee.” He said that taste and quality are top two drivers of customer visits, but “we have a 100 different coffee machines across our business today. So how can you possibly deliver a consistent experience if you aren’t even putting the product together in a consistent way?
“So we’re going to just get a lot more focus. We’re going to bring that consistency to life at scale,” he added. “And we believe by doing that, we can deliver a significant impact on taste and quality for customers and deliver a better experience.”
Shares of McDonald’s were falling 3.1% to $285.26 on Wednesday. The stock has dropped 3.4% this year.
Shares of competitor Wendy’s were up 0.8% while Taco Bell owner Yum! Brands dropped 1.4%. urger King owner Restaurant Brands International gained 1%.
Write to Angela Palumbo at angela.palumbo@dowjones.com