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McDonald’s reports mixed Q1 performance amid Mideast pressure

Fast food service retailer McDonald’s reported mixed quarterly results on Tuesday but said higher U.S. sales in the first quartal helped it overcome weakness in the Middle East and other markets where consumers have been boycotting the brand.

The Chicago burger giant said its same-store sales – or sales at stores open at least a year – rose 1.9% worldwide in January-March. That was below Wall Street’s forecast of a 2.1% increase, according to analysts polled by FactSet.

In the U.S., same-store sales rose 2.5% as the company raised prices and saw higher demand for delivery. But sales fell 0.2% in McDonald’s international franchised markets. It was the first time since 2020 that same-store sales have fallen in that segment.

Customers across the Middle East and in Muslim-majority markets like Indonesia and Malaysia have been boycotting McDonald’s for months over its perceived support for Israel. The boycotts began in October after McDonald’s local Israeli franchisee announced it was providing free meals for Israeli troops involved in the war in Gaza.

The big fast-food chain experienced a dip in comparable sales in “International Developmental Licensed Markets,” which comprises emerging markets.

“The continued impact of the war in the Middle East more than offset positive comparable sales in Japan, Latin America and Europe,” McDonald’s said of the division.

However, McDonald’s has tried to limit the fallout. In early April, the company said it was buying Alyonal Limited, its Israeli franchisee, and taking over the country’s 225 restaurants. Financial terms of the deal weren’t released.

McDonald’s said its revenue rose 5% to $6.17 billion in January-March. That was in line with Wall Street’s estimates.

Net income was up 7% to $1.93 billion. Earnings, adjusted for restructuring charges, were $2.70 per share, short of analysts’ forecast of $2.72.

The company’s shares were down 1.5% in premarket trading Tuesday.

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