McDonald's sales were small as price-sensitive customers curbed the spending of the Fast Food Giant.
In Australia, the chain is also under pressure from many new competitors, with consumers swapping their traditional burgers and fries for burritos or charcoal chicken bags.
The change in buying habits is the question of whether McDonald's can still find convenience at McDonald's, well-priced meals after a series of menu prices rise.
Are famous burger chains too expensive now amid the cost of living crisis?
McDonald's has just reported its highest quarterly decline in sales in the U.S. since the pandemic, with same-store sales down 3.6%. It also reported a decline in global sales.
The result is slow spending in the U.S. consumers and their major overseas markets, including Australia.
McDonald's executives point out that high cost of living affects not only low-income consumers, but also middle-income consumers, a worrying sign for businesses that rely on mass markets.
Shaun Weick, deputy portfolio manager at Sydney-based Wilson Asset Management, said the rise of competitors, including Mexican-themed Guzman Y Gomez, is attracting McDonald’s clients.
"McDonald's has lost the view of representing value," Wake said.
“I’ve always heard that McDonald’s is losing market share because they’ve priced from the market; they’re priced too high.”
The fast food market is very sensitive to price changes as customers constantly weigh the cost and convenience of buying takeaway.
Over the past three years, McDonald's has increased the price of a pack of six blocks by about 22% to over $8. Now, small big bark meals are priced over $12, while larger meals are priced over $15, while these burger varieties are priced over $15.
The question for Australian consumers is whether the price difference between McDonald's meals and more premium products (for example, in the $20 burger meal at the Middle Eastern-style chicken chain El Jannah, is enough to get them into the Golden Arch.
Research from Sydney's Fonto shows that McDonald's has performed poorly in customer satisfaction compared to other brands.
"Absolutely favor these options, especially with the cost gaps that reduce these meals," said Ben Dixon, CEO of Fonto. "McDonald's has the lowest satisfaction with major brands, which mainly revolves around the price people pay for the price they get."
This is not all bad news for McDonald's. Fonto's research shows that customers still value convenience - McDonald's expertise.
According to researcher Gapmaps, the chain opened its first Australian store in 1971 in Yagoona, a Sydney suburb, and has expanded to more than 1,050 locations nationwide, second only to the subway.
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McDonald's global chief financial officer Ian Borden told analysts earlier this month that the chain has made progress in Australia in the face of a decline in traffic across the sector, and the company is looking forward to seeing momentum.
Its Australian business relies in part on its “loose change menu” to bring customers back during the cost-of-living crisis. It has achieved success in Canada by providing $1 in coffee.
McDonald's Australia and its U.S. corporate headquarters did not answer questions.
McDonald's has a slow appetite for McDonald's, and the company's stock price is close to a record high.
But it could be a different story for its franchisees, who hope to draw on their long-term success by running a restaurant.
Fast food restaurants are between raising menu prices in response to higher costs while keeping menu prices to maintain or increase profit margins and trying not to delay price-focused customers.
When KFC had a strategy to undercut McDonald's prices, it quickly tried to regain trust by revealing value deals in lunch and dinner when it found Australian customers were unhappy with some of their price increases.
After a long period of rapid growth in cost of living, there are some early signs that households are in financial status as inflation eases.
Further rate cuts will also help consumers, especially those with “mortgage belts,” who are the most common fast food restaurant visitors, Wake said.
He said there is still a question whether McDonald's will share this recovery or whether it will be a further basis for competitors.
“At present, the industry has not yet shot out lights, but it feels like it’s bottoming out and it’s improved,” Wick said.
“But I don’t think recovery will be unified.”