McDonald’s CEO has admitted that the company’s recent sales have taken a hit due to increased menu prices, leading to a renewed focus on affordability moving forward. The global fast-food giant fell short of Wall Street’s expectations, with only a 3.4% growth in same-store sales, largely attributed to the deterrence of core customers by the high prices.

Notably, the exorbitant cost of a Big Mac combo, priced at nearly $18, sparked criticism and resulted in a 4% drop in McDonald’s shares on the New York Stock Exchange.

“McDonald’s CEO promises ‘affordability’ amid backlash over $18 Big Mac combos, $6 hash browns”

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— Brian Roemmele (@BrianRoemmele) February 6, 2024

Speaking on a recent earnings call with analysts, CEO Chris Kempczinski acknowledged the need to address affordability concerns, particularly among low-income customers earning less than $45,000 per year. As inflation pressures persist, these customers are increasingly opting to eat at home, where grocery prices have become more manageable.

Despite plans for future price hikes, expected to be more moderate at 2% to 3%, McDonald’s aims to offset these increases with targeted discounts offered through its mobile app, according to restaurant analyst Mark Kalinowski.

Recent instances of steep pricing, including a $7.29 Egg McMuffin and a $17.59 Big Mac combo, have drawn public outrage and underscored the urgency for McDonald’s to address pricing disparities. While the company anticipates growth to moderate to 3% to 4% in the US, driven primarily by increased menu prices, it faces significant challenges in regions like the Middle East.

McDonald’s franchisees in the Middle East have experienced disruptions amidst ongoing conflict, exacerbated by misconceptions about the company’s stance on the Israel-Hamas war.

The resulting protests and vandalism highlight the complexities of operating in volatile regions. With a sizable portion of its global restaurants located in the Middle East, McDonald’s expects limited improvement until regional stability is restored, according to CFO Ian Borden.

Additionally, impending minimum wage hikes, such as California’s $20-an-hour mandate for fast-food workers, threaten to further strain McDonald’s and other industry players. The prospect of increased labor costs signals a broader trend of rising operational expenses, potentially translating to higher menu prices for consumers.

McDonald’s, along with Chipotle, has announced plans to adjust pricing at California locations in response to the impending wage hikes, reflecting the broader economic challenges facing the fast-food sector.