McDonald’s (MCD) Q4 2024 earnings

McDonald’s on Monday reported disappointing quarterly revenue, dragged down by weaker-than-expected sales at its U.S. restaurants following an E. coli outbreak just weeks into the quarter.

But shares of the company rose nearly 5% as executives predicted sales would improve in 2025.

Here’s what the company reported compared with what Wall Street was expecting, based on a survey of analysts by LSEG:

• Earnings per share: $2.83 adjusted, meeting expectations
• Revenue: $6.39 billion vs. $6.44 billion expected

Net sales of $6.39 billion were roughly flat compared with the year-ago period. The company’s overall same-store sales growth of 0.4% outperformed Wall Street’s expectations of same-store sales declines of 1%, according to StreetAccount estimates.

But McDonald’s U.S. business reported a steeper-than-expected drop in its same-store sales. Same-store sales at the company’s domestic restaurants fell 1.4% in the quarter; Wall Street was projecting same-store sales declines of 0.6%.

McDonald’s said traffic was slightly positive, but customers spent less than usual during the quarter. Over the summer, the chain rolled out a $5 combo meal to bring back price-conscious diners and reverse sluggish sales. The strategy worked, helping McDonald’s U.S. same-store sales tick up in the third quarter.

However, analysts have warned that value meals only work if customers also add menu items that aren’t discounted to their orders. McDonald’s executives downplayed those concerns Monday, saying the average check on the $5 meal deal is more than $10.

The biggest hit to McDonald’s U.S. sales came in late October, when the Centers for Disease Control and Prevention linked a fatal E. coli outbreak to its Quarter Pounder burgers. McDonald’s switched suppliers for its slivered onions, the ingredient fingered as the likely culprit for the outbreak. In early December, the CDC declared the outbreak officially over.

However, in the days following the news of the outbreak, traffic at McDonald’s U.S. restaurants fell steeply, particularly in the states affected.

U.S. sales hit their nadir in early November, but began rising again after that. In particular, demand for the Quarter Pounder, a popular core menu item with high margins, fell quickly in the wake of the crisis.

McDonald’s expects its U.S. sales to recover by the beginning of the second quarter, executives said.

“I think right now what we’re seeing is that the E. coli impact is now just localized to the areas that had the biggest impact,” CEO Chris Kempczinski said on the company’s conference call. “So think about that as sort of the Rocky Mountain region that was really the epicenter of the issue.”

The company hopes value deals, along with key menu additions, will help to fuel the recovery this year. In 2025, the burger chain plans to bring back its popular snack wraps, which vanished from menus during pandemic lockdowns, and to introduce a new chicken strip menu item.

Outside the U.S., sales were stronger. Both of McDonald’s…