McDonald’s reported a second-quarter net income of $2.36 billion on Tuesday, even as U.S. sales growth slowed to 0.8%. CEO Chris Kempczinski blamed execution lapses and a pullback in digital deals for the shortfall, while naming Skye Anderson as the new president of McDonald’s USA.
The burger chain posted strong overall profits for the quarter, but domestic performance showed notable friction. While international markets and beverage sales brought positive momentum, same-store sales growth in the United States dropped sharply from the 2.5% increase recorded a year prior. Executives acknowledged that the company failed to capture the expected traffic from lower-income consumers grappling with higher everyday costs.
Execution Lapses and Value Push Missteps
Domestic same-store sales edged up just 0.8% for the three months ended June 30, missing analyst estimates of a 1.06% rise compiled by LSEG. Global same-store sales rose 1.3%, decelerating from a 3.8% jump during the same period a year earlier. Chief Executive Officer Chris Kempczinski addressed the domestic slowdown directly during the company’s earnings call.
“We don’t have a strategy problem, we simply didn’t execute at the level we needed to in the second quarter.”
Chris Kempczinski, CEO, McDonald’s
According to executive commentary, the company’s broader playbook remains sound, but domestic missteps blunted the impact of its value initiatives. In April, the burger giant introduced a simplified McValue menu featuring 10 items priced at $3 or less, alongside a $4 breakfast meal deal. However, executives noted that these offerings generated less incremental traffic than anticipated.
Digital Pullbacks and Consumer Pressures
A critical factor in the traffic shortfall was a strategic miscalculation regarding digital promotions. Chief Financial Officer Ian Borden pointed out that the company phased out many digital promotions earlier this year, including its buy-one-add-one promotion.
Without those offers, loyal customers—who accounted for about two-thirds of the traffic shortfall in the quarter—either bought less or skipped visits entirely.
This softer domestic demand unfolded against a backdrop of persistent economic caution. Lower-income consumers faced tighter budgets due to elevated prices for basic goods and fuel. Gas prices climbed earlier in the season, and corporate leadership warned in May that consumer anxiety could weigh on dining out.
Leadership Shakeup at McDonald’s USA
To regain momentum in its largest market, McDonald’s announced a major leadership change, naming company insider Skye Anderson as the new president of McDonald’s USA. Anderson replaces Joe Erlinger, bringing extensive experience across both operations and international markets.
Financial analysts at Citi noted that the appointment signals clear dissatisfaction with recent domestic performance from corporate management and could accelerate the execution of sales and profit growth initiatives. Company shares, which fell nearly 13% earlier in the year, rose less than 2% following the earnings report.
Financial Results and Global Performance
Despite domestic sales headwinds, the Chicago-based chain reported second-quarter net income of $2.36 billion, or $3.32 per share, up from $2.25 billion, or $3.14 per share, a year earlier. Excluding one time charges and benefits, McDonald’s earned $3.38 per share, beating the $3.32 per share expected by Wall Street analysts polled by FactSet.
Net revenue rose to $7.1 billion, climbing from $6.84 billion in the prior-year period, though it came in slightly below analyst expectations of $7.13 billion. In the international operated markets segment, which includes major European nations, comparable sales rose 1.5%, down from 4% a year ago.
Corrective Steps and What Comes Next
McDonald’s is already working to reverse its domestic trajectory. Leadership confirmed that the company has begun restoring national digital offers, deploying more targeted promotions for loyalty program members, and redirecting marketing funds toward proven value platforms. National digital offers are slated to roll out starting next week.
At the same time, bright spots on the menu offered encouragement. Kempczinski reported that the company’s new beverage platform ran ahead of plan, lifting average spending per visit and drawing customers at new times of the day.
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