{"text":[[{"start":7.2,"text":"McDonald’s has warned of mounting inflationary pressures for its franchisees and customers squeezed by rising energy and beef costs."}],[{"start":16.35,"text":"The fast-food chain reported like-for-like sales at its more than 45,000 stores globally were up 3.8 per cent in the first three months of the year, after luring back diners with cheap meal bundles. The rise was slightly ahead of Wall Street estimates but lower than the 5.7 per cent rise for the previous quarter."}],[{"start":37.900000000000006,"text":"However, higher costs are constricting cash flows for the franchisees that account for 95 per cent of McDonald’s restaurant fleet, chief executive Chris Kempczinski said on a call with analysts on Thursday. "}],[{"start":50.60000000000001,"text":"“No surprise, with the inflation that we’re seeing in the market, there’s certainly a lot of pressure that we’re trying to navigate with franchisees around their own profitability,” he said."}],[{"start":60.10000000000001,"text":"The war the US and Israel launched against Iran in late February led to attacks around the Middle East and a near-total halt to shipping through the Strait of Hormuz. The “operating environment remains volatile” for McDonald’s in the region, but the war did not affect total company results in the first quarter, Kempczinski said."}],[{"start":79.60000000000001,"text":"The war has also driven up global oil and natural gas prices, raising costs for energy uses such as cooking and freight transport. Petrol prices in the US have risen more than half since February, draining the budgets of poorer households that underpin McDonald’s clientele. "}],[{"start":95.05000000000001,"text":"“That is going to disproportionately impact low-income consumers. We expect the pressures there are going to continue,” Kempczinski said. "}],[{"start":103.65,"text":"For the past two years, McDonald’s has promoted food and drinks items at low price points to win back market share. New “value” menus launched in the US last month include a $4 breakfast of sausage sandwich, hash browns and coffee. Kempczinski said the promotions had slowed but not stopped the chain’s share losses among low-income customers. "}],[{"start":125.7,"text":"The cheap meal deals have also pinched restaurant profits. In the US, executives called out poor performance at the 641 locations that McDonald’s directly owns and operates, and said the company was revisiting its balance of franchises and company-managed stores. "}],[{"start":141.35,"text":"“It was investing in . . . additional labour at the same time that they were probably being even more restrained around pricing,” Kempczinski said. “When you are adding labour to the restaurants and you’re also not passing through some of the costs because you’re being overly conservative around pricing, you end up having the performance that we’ve talked about here.”"}],[{"start":162.45,"text":"The impact of the Iran war on consumer spending, the engine of the US economy, is also being watched closely by Federal Reserve policymakers, as they weigh how to set monetary policy this year."}],[{"start":174.1,"text":"Beth Hammack, president of the Fed’s Cleveland branch, on Thursday said: “This spending that’s helped keep economic growth so solid in the US could be in jeopardy, because these higher prices might mean that individuals can’t spend the way they could.”"}],[{"start":189.29999999999998,"text":"McDonald’s revenues in the quarter rose 9 per cent to $6.5bn, slightly ahead of estimates compiled by Visible Alpha, while net income increased 6 per cent to $1.98bn, also modestly topping estimates. Its shares were largely flat on Thursday. "}],[{"start":208.1,"text":"Markets including the UK, Germany, Australia and Japan as well as the US posted gains, the company said on Thursday, while France stood out for weak performance."}],[{"start":218,"text":"McDonald’s stood by earlier guidance for its financial performance, partly because it had hedged costs for food, paper packaging and energy, said Ian Borden, chief financial officer. "}],[{"start":228.7,"text":"“Longer term, we believe there is an increased risk of higher cost inflation due to ongoing global supply-chain disruptions,” Borden said."}],[{"start":236.54999999999998,"text":"Rival fast-food chain Shake Shack is also dealing with elevated beef costs. Its shares plunged a record 28 per cent after it reported higher first-quarter sales on Thursday, but swung to a net loss because its expenses jumped and the Middle East conflict disrupted some of its businesses."}],[{"start":255.14999999999998,"text":"Additional reporting by Myles McCormick"}],[{"start":265.29999999999995,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1778211113_7324.mp3"}