Declining Sales Trends
Q: How are recent sales trends, and when will comps turn positive?
A: Sales are currently negative, with comps starting Q3 similar to how Q2 ended, reflecting negative trends across all operating segments. " " We do not expect significant changes in the environment for the next few quarters. " " McDonald's is committed to getting back to growth through value platforms, menu innovation, digital initiatives, and marketing. " "

$5 Meal Deal Impact
Q: Is the $5 meal deal driving expected sales and traffic?
A: The $5 meal deal has performed as intended, improving brand perceptions around value, increasing trial among low-income consumers, and boosting guest counts. " While it hasn't yet translated into sales, the average check for the deal is over $10. " We believe traffic growth precedes sales growth, and upcoming promotions may further improve performance. " "

Value Leadership Gap Shrinking
Q: The value leadership gap has shrunk; how is this measured, and can it be regained?
A: We measure value perception through consumer surveys on brand image and recent experience. " Our leadership gap is shrinking, particularly on recent visits. " We are confident we can regain our value leadership due to our purchasing power, brand equity, menu offerings, marketing scale, and focus on delivering a strong customer experience. "

Margin Outlook
Q: How will increased value offerings impact store margins?
A: Restaurant margins have held up well despite muted top-line growth, aided by lower inflation in food and paper costs. " " However, we expect margins to be down slightly from 2023 levels due to less pricing power and wage pressures, especially in the U.S.. " " We aim to implement sustainable strategies without subsidizing pricing. "

Challenges in France and China
Q: What are the issues in France and China, and how are they being addressed?
A: In France, we're losing market share due to competitive pricing and shifts in family dining. " We're enhancing our value offerings, such as the EUR 4 Happy Meal, to address this. " In China, consumer sentiment is weak, and the market is highly promotional. " Despite this, we're holding share, and new unit returns remain strong, so we continue our plan to open 1,000 restaurants per year. "

Trade-Down Effect
Q: Why isn't trade-down offsetting the loss of low-income consumers?
A: While we are seeing some trade-down, the loss of low-income consumers who are eating out less is greater than the benefit from trade-down. " These consumers are economizing by eating at home and reducing visits. "

Digital Business Limitations
Q: Why hasn't digital growth offset sales challenges, and can it help going forward?
A: Our digital business is performing well, but only about 25% of customers are using digital channels. " Therefore, digital alone isn't enough to drive the entire business. " We may have overemphasized digital at the expense of broad value offerings available to all consumers. "

Franchisee Support and Investment
Q: Will McDonald's need to support franchisees due to value initiatives?
A: Our franchisees, particularly in the U.S., are in a strong financial position and have the ability to invest. " We are working collaboratively with them to ensure sustainable value offerings without subsidizing pricing. " We believe that focusing on value drives volume-led growth, benefiting both McDonald's and franchisees. "

Timeline for National Value Platform
Q: When will a broader national value platform be implemented in the U.S.?
A: Discussions with franchisees are ongoing to establish a long-term, sustainable national value platform. " The $5 meal deal has been extended in 93% of restaurants into August, and we are working to extend it further while developing the broader platform. "

Competitive Pricing Strategies
Q: How is McDonald's responding to competitors' aggressive pricing?
A: We acknowledge increased competition, particularly in markets like France. " We're enhancing our value platforms, such as McSmart in Germany and similar offerings in other markets, to remain competitive. " "

Effect of Lower Input Costs
Q: Are lower input costs helping fund value offerings without impacting margins?
A: Lower inflation in food and paper costs, now at low single digits, is helping offset some margin pressures. " " However, wage inflation continues, so while input cost relief aids margins, we still need to be cautious. " "

Anticipated Improvement Timeline
Q: When can sales trends improve, given current strategies?
A: While we cannot predict exactly when the environment will change, we are focused on positioning ourselves to win by adjusting value propositions and leveraging our strengths. " We expect challenging conditions to persist for the next few quarters but aim to accelerate momentum as the environment improves. "