McDonald's has reported a rare global decline in sales, with price-sensitive customers cutting back on spending at the fast food giant. In Australia, the chain is under pressure from new competitors such as Guzman y Gomez and El Jannah, as consumers swap traditional burgers and fries for burritos or charcoal chicken.
Analysts say McDonald's has lost its perception of value after a series of menu price increases. Over the past three years, the price of a six-pack of nuggets has risen about 22% to over A$8, while a small Big Mac meal now costs more than A$12. The narrowing price gap between McDonald's and more premium offerings is prompting customers to switch.
Research from Sydney-based Fonto shows McDonald's consistently underperforms on customer satisfaction compared with other brands, particularly regarding price. However, the chain still excels in convenience, with over 1,050 locations across Australia.
McDonald's global CFO Ian Borden told analysts the company was making progress in Australia and looking forward to building momentum. The Australian business is relying on its 'loose change menu' to attract customers during the cost-of-living crisis, following success in Canada with a C$1 coffee.
Despite the sales decline, McDonald's US stock price is near record highs. However, franchisees face a delicate balance between raising prices to maintain margins and retaining price-conscious customers.
