It’s been a tough year across the board for restaurant traffic as consumers tighten their spending in favor of cooking at home. Despite a wildly successful run these last few years, McDonald’s hasn’t been immune to the current environment. In February, CEO Chris Kempczinski said the company was experiencing transaction reductions from those making $45,000 and below – an overindexing demographic for the chain. Executives cautioned that those headwinds were expected to continue through the duration of 2024 and that seems to be the case so far based on new data from analytics firm Placer.ai.
In the 27 weeks measured this year, McDonald’s has experienced negative year-over-year comparisons for nine of them. For the rest of those weeks, just three generated traffic comps higher than 3% – the week of Jan. 29, which was up 7.6% year-over-year; the week of Feb. 5, which was up 3.5%; and the week of July 1, up 3.1%.
That latter number is important, as it marks the first full week after McDonald’s launched its $5 Meal Deal in an attempt to win back some of its lower-income consumers. With the traffic number turning positive following a week in which traffic comps were down 0.7%, it indicates that the value offering is doing what it’s intended to do. The day of the launch, June 25, marked McDonald’s busiest Tuesday of the year thus far, generating 8% more visits than the year-to-date Tuesday average, according to Placer.ai.
It’s important to note that much of McDonald’s challenged comps toward the end of Q2 come because of last year’s wildly successful – and viral – Grimace Shake launch, which prompted a Grimace Shake Challenge on TikTok that initially garnered more than 1.4 billion impressions. During the week of June 26, 2023, when full virality was achieved on TikTok, McDonald’s traffic was up a staggering 16.4% year-over-year and 13% week-over-week.
Take that lightning out of the bottle and McDonald’s comps still appear to be much stronger on a two-year basis. Placer.ai data shows that the chain’s traffic is up 10.6% and 13.2% over 2022 numbers during the last week in June and first week in July, respectively. By comparison, the QSR segment overall was up just 7.2% and 8.3% during that time.
“McDonald’s $5 Meal Deal appears to be having a positive impact on visitation trends. The company was lapping last year’s Grimace Shake promotion during the last week of June, but Placer data indicates strong visit trends on a year-over-year basis as we moved past that promotion in the first week in July. If we compare visit trends to 2022 to exclude the impact of last year’s Grimace Shake, we also see strong acceleration the past two weeks, as well as outperformance compared to the rest of the QSR sector,” Placer.ai head of analytical research RJ Hottovy told Nation’s Restaurant News.
To be sure, it’s been a tough traffic environment for the entire QSR segment, but the segment’s numbers have outpaced McDonald’s for much of the year, with just six weeks of negative traffic trends year-over-year and seven weeks comping over 3%. Still, McDonald’s post-Meal Deal tailwind comes as nearly every other brand – from Taco Bell and Taco John’s to Burger King to Starbucks – is also offering up their own version of a value meal.
Placer.ai data released today suggests these pricing deals are having a positive impact across the board. Buffalo Wild Wings’ foot traffic grew by 8.1% following its unlimited boneless wings introduction. The deal is available each Monday and Wednesday and visits to the chain have jumped by 45.6% and 49.3% on those days, respectively.
Following Starbucks’ limited-time 50% Friday discount introduction in May, Friday visits increased 20% compared to year-to-date visits on that day. What this lift tells us is that a good, old-fashioned deal can still generate plenty of interest, even for weary consumers. The questions now focus on how long the momentum will last and whether margins will be affected.
Contact Alicia Kelso at [email protected]