McDonald’s Reports Lower-Than-Expected Revenue Amid U.S. Sales Decline but Foresees 2025 Recovery

On Monday, McDonald’s announced weaker-than-expected quarterly revenue, primarily due to a drop in U.S. sales following an E. coli outbreak early in the quarter. However, the company’s stock rose by more than 4% in morning trading as executives expressed confidence in a sales rebound by 2025.

Financial Performance vs. Wall Street Expectations

According to analysts surveyed by LSEG, McDonald’s reported the following results:

• Earnings per share: $2.83 (adjusted), meeting expectations
• Revenue: $6.39 billion, slightly below the projected $6.44 billion

Net sales remained largely unchanged from the previous year. Despite a modest overall same-store sales increase of 0.4%, which outperformed Wall Street’s forecast of a 1% decline (per StreetAccount estimates), the company’s U.S. business struggled.

Same-store sales at U.S. locations fell by 1.4%, surpassing the 0.6% decline analysts had anticipated. While customer traffic remained slightly positive, spending per transaction was lower than usual.

Impact of Value Promotions and the E. coli Outbreak

In an effort to attract budget-conscious customers, McDonald’s introduced a $5 combo meal during the summer, which contributed to stronger third-quarter sales. However, analysts caution that value deals are only effective if customers also purchase full-priced menu items. McDonald’s executives reassured investors that the average ticket for the $5 meal deal exceeds $10.

The most significant blow to McDonald’s U.S. sales came in late October, when the Centers for Disease Control and Prevention (CDC) linked a fatal E. coli outbreak to the company’s Quarter Pounder burgers. The outbreak was traced to slivered onions, prompting McDonald’s to change suppliers. By early December, the CDC declared the outbreak officially over.

In the aftermath of the crisis, McDonald’s U.S. traffic saw a sharp decline, particularly in affected states. Sales hit their lowest point in early November before beginning to recover. The Quarter Pounder, a high-margin core menu item, saw a rapid drop in demand.

Outlook for 2025: Recovery and New Menu Items

McDonald’s anticipates a full U.S. sales recovery by early Q2 2025.

“The impact of the E. coli outbreak is now largely confined to the areas most affected, primarily in the Rocky Mountain region,” said CEO Chris Kempczinski during the company’s earnings call.

To drive recovery, McDonald’s plans to expand value deals and introduce new menu offerings in 2025. Key upcoming items include:

• The return of snack wraps, which were discontinued during the pandemic
• A new chicken strip menu item

International Markets Drive Growth

Despite challenges in the U.S., McDonald’s international markets delivered stronger performance:

• International developmental licensed markets (including the Middle East and Japan) saw 4.1% same-store sales growth
• International operated markets, which include some of McDonald’s largest regions, reported 0.1% same-store sales growth

While most international markets experienced sales growth, the U.K. and a few other regions saw declines. However, France was a bright spot, with sales rebounding after a prolonged slump.

Q4 Financial Summary and Future Growth Plans

McDonald’s reported a fourth-quarter net income of $2.02 billion ($2.80 per share), compared to $2.04 billion ($2.80 per share) a year ago.

Excluding special items—such as gains from selling its South Korean business, expenses related to acquiring its Israeli franchise, and other transaction costs—McDonald’s adjusted earnings per share remained at $2.83.

Expansion Plans for 2025

McDonald’s plans to open approximately 2,200 new restaurants worldwide in 2025:

• Around 25% of these will be in the U.S. and international operated markets
• The remaining 75% will be in international developmental licensed markets, with 1,000 new locations planned in China

McDonald’s expects to spend $3 billion to $3.2 billion on capital expenditures this year, primarily on expansion.

Potential Challenges Ahead

Looking forward, McDonald’s CFO Ian Borden indicated that Q1 2025 will likely be the weakest quarter for same-store sales, citing several factors:

• A slow start to the year in the U.S.
• Adverse weather conditions, including winter storms and wildfires in California, which impacted restaurant traffic in January

Additionally, foreign currency exchange rates are projected to negatively impact full-year earnings by $0.20 to $0.30 per share.

Despite short-term challenges, McDonald’s remains optimistic about long-term sales recovery, menu innovation, and global expansion as key growth drivers heading into 2025.