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McDonald’s exit from Russia in April sparked a revenue drop at the fast-food giant despite US sales that were goosed by higher prices amid surging inflation.
The company’s overall revenue dipped 3% to $5.8 billion in the second quarter largely because McDonald’s closed its company-owned eateries in Russia and Ukraine after the war broke out. Profits fell by nearly half due to a $1.2 billion charge related to the sale of the Russian business, the company said Tuesday.
Russia was one of the company’s largest international markets, with McDonald’s reporting that it owned 84% of its 847 restaurants in the country.
At the same time, menu price increases fueled a 9.7% increase in global comparable sales including a 3.7% increase in the US but excluding stores that were exited in Russia.
In April, the company said it increased menu prices by an average of 8%. On Tuesday it said some of its low-income consumers who had been trading down to cheaper menu options last quarter were continuing to do so now.
“We now face war in Europe, inflation is running at the highest levels in 40 years, interest rates are rising to levels we haven’t seen in years,” chief executive Chris Kempczinski said on a call with analysts on Tuesday. “All of this is contributing to weak consumer sentiment around the world and the possibility of a global recession.”
“The operating environment across the competitive landscape remains challenging. While we are planning for a wide range of scenarios, I am confident that our plans and people position McDonald’s to weather this environment better than others,” Kempczinski said in a statement.
Shares of the company were up 2.7% to $257.09 on Tuesday.
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