Sales at McDonald's are slowing down. Earnings missed estimates for the fourth quarter, hurt in part by the war in Israel and widespread boycotts against the restaurant chain in response to their handling of the Israel-Palestine conflict. 

Stamford

McDonald's earnings hurt by Middle East boycotts

McDonald's sales missed investor expectations in the fourth quarter, hurt in part by the conflict in the Middle East, in which nations had boycotted the brand Muslim Nations over the perceived stance on the war in Gaza. Growth in other regions weakened as well, and comparable sales were the slowest since the fourth quarter of 2020. Bloomberg's Daniela Sertori Cortina covers restaurant chains and joins me now. Explain how McDonald's was caught in the crosshairs here, and whether some of the impacts in the Middle East have been surprising in terms of the revenue they've been able to take in. Yeah, McDonald's got caught in the crossfire here because, of course, of boycotts pretty early in the war after, you know, some franchisees, and the franchisee in Israel posted photos of them, you know, giving meals to the country's army, you know, that really, you know, elicited a pretty swift response from, you know, franchisees in other Muslim countries. But, you know, when this first came out, there were a lot of questions about just how big and significant the impact was going to be, because McDonald's is really, you know, diversified geographically. You know, the segment that the Middle East is part of is only 10% of revenue, but, you know, we did see this quarter that that was, you know, big enough to drag growth down, you know, sales for that segment that includes the Middle East only rose 0.7%, and it was a big miss compared to what analysts were expecting. Speak about the broader impact here, because it's not just in the Middle East, per se, that McDonald's was impacted by the conflict and the backlash. France, for example, felt an impact as well, according to Bloomberg's headlines coming out of the results. Where else are you seeing the pain? That was really interesting. I mean, France is part of a different market segment altogether that mostly comprises developed countries, and the rest of those countries, McDonald's said, did pretty well. So the UK, Germany, Canada, but they did point out France as one of the countries that suffered from these boycotts, and they cited the country's, you know, large Muslim population. That's about what McDonald's said today. But other companies, including Starbucks, have also pointed to the impact beyond the Middle East. For example, Starbucks said that stores here in the U.S. actually suffered from the boycotts. What about China, Daniela? How much of an impact are they seeing there? And to what extent do things start to turn around for McDonald's? And when? Well, companies are still, companies, including McDonald's, are still citing a pretty slow environment in China. I will say this quarter, actually, the focus was more on the Middle East, the trends in the U.S., and in other international markets. And if you look overall at McDonald's, you know, same-store sales, they actually have decelerated quite a bit over the past few quarters. And the thing is that McDonald's had been benefiting, you know, from outsized growth because of this, you know, a few, over the past few years, in part because of the rebound for COVID. They, you know, raised prices pretty meaningfully to offset inflation. They were also taking share, you know, from full-service restaurants. And so now they're actually saying that their trends are going to normalize a little bit. So that was more of the conversation that we were seeing today on the call.

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