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McDonald’s said that business in the Middle East had picked up after a year in the doldrums related to boycotts over the war in Gaza, helping to drive an unexpected rebound in worldwide sales.
The US fast-food chain reported on Monday that global comparable sales increased 0.4 per cent in the fourth quarter year on year, defying predictions of a 0.4 per cent decline, based on a Visible Alpha poll of analysts.
Propelling the rise in sales were gains in certain international markets led in part by the Middle East, the Chicago-based company said.
McDonald’s sales have been under pressure since Hamas’s attack on Israel in October 2023 led to a massive offensive by the Israel Defense Forces in Gaza.
Boycotts against US brands including McDonald’s and Starbucks were launched in several Middle Eastern countries as well as others with Muslim majorities such as Indonesia and Malaysia.
The pro-Palestinian Boycott, Divestment, Sanctions movement alleged in 2023 that McDonald’s was “complicit with Israeli atrocities” after an Israeli franchisee’s decision to offer discounts and free meals to soldiers and security forces.
Comparable sales in a McDonald’s international division composed mainly of licensees rose 4.1 per cent year on year in the fourth quarter, the first increase in 12 months.
The company said the improved performance in the Middle East largely reflected “lapping” the initial impacts of the Gaza war first registered a year ago.
However, in a filing on Monday McDonald’s said it expected the situation in the region would “continue to have a negative impact on system-wide sales and revenue until the war concludes and the macroeconomic conditions recover”.
Israel and Hamas agreed a ceasefire last month.
In the US, comparable sales fell 1.4 per cent in the fourth quarter, a deeper than expected decline, which McDonald’s said reflected reductions in the average amount spent by customers during each visit even as footfall showed a modest revival.
McDonald’s has been extending discounts and promotions in a bid to perk up sales.
The US sales decline came after the company grappled with an E.coli outbreak tied to an onion supplier in Colorado that led to more than 100 cases of illness and one death, according to the Centers for Disease Control and Prevention.
Chris Kempczinski, chief executive, said he expected McDonald’s to have fully recovered from the hit to US sales by the beginning of the second quarter.
Restaurants in several states temporarily shut in late October as authorities investigated and contained the outbreak.
In the UK, where the company has 1,470 restaurants, Kempczinski said McDonald’s consumers were “under pressure,” while a very strong local competitor he did not name had been “very aggressive from a value standpoint, particularly on breakfast”.
“We have a very big family business in the UK. That has impacted us as families are looking to economise,” he said.
McDonald’s said revenue in the fourth quarter was unchanged from a year earlier, at $6.4bn, slightly less than analysts’ estimates.
Revenue includes sales at all company-owned restaurants and fees paid to McDonald’s from franchised stores.
Comparable sales are derived only from restaurants open at least 13 months, both company-owned and franchised.
Net profit fell 1 per cent to $2bn, below estimates for $2.1bn.
McDonald’s shares were up 4.6 per cent in late-morning trading on Monday in New York.
