McDonald's says its U.S. business is falling short as it announces new head of its largest market

McDonald's on Tuesday reported mixed quarterly results as the chain's U.S. performance fell short of executives' expectations.

"We don't have a strategy problem," CEO Chris Kempczinski said on the company's earnings conference call. "We simply didn't execute at the level we needed to in the second quarter."

The company also announced that Skye Anderson is assuming the role of president of its U.S. business, effective Tuesday, as it tries to boost performance in its home market. She succeeds Joe Erlinger, who led the division for more than six years. Anderson, a 26-year McDonald's veteran, previously served as chief operating officer of McDonald's USA and led its Global Business Services unit before that.

"While our playbook is working around the world, we see an opportunity to raise the bar in the U.S. and accelerate performance in our largest market," Kempczinski said in a statement.

Shares of the company rose slightly in morning trading.

Here's what the company reported for its second quarter ended June 30 compared with what Wall Street was expecting, based on a survey of analysts by LSEG:

The burger giant reported second-quarter net income of $2.36 billion, or $3.32 per share, up from $2.25 billion, or $3.14 per share, a year earlier. Excluding restructuring charges and other items, McDonald's earned $3.38 per share.

Net revenue rose 4% to $7.1 billion.

The company's global same-store sales ticked up 1.3%, meeting Wall Street's expectations, according to StreetAccount estimates.

McDonald's U.S. same-store sales increased 0.8% in the quarter. The chain said that average check rose, but traffic to its domestic restaurants fell.

Executives said that McDonald's U.S. performance was disappointing, starting with the implementation of its value strategy.

Kempczinski said that its U.S. restaurants, which are predominantly operated by franchisees, have not consistently executed its strategy for discounts. McDonald's allows franchisees to set their own prices, although the company assesses how operators' menu prices help the chain deliver value. For franchisees, discounts can grow sales but eat into profits.

Only about 60% to 65% of its system has implemented its "under $3 menu," which should include 10 items, according to Kempczinski. The loose $3 parameter meant some franchisees actually raised prices on items like a small-size order of fries. At the same time, McDonald's pulled back on many national digital offers, which play an important role in McDonald's loyalty program.

"There was a fairly significant amount of price [increases] that got taken in Q2 as a result of those two moves," Kempczinski said.

Additionally, too many complicated launches slowed down restaurant operations, adding to service times and hurting customer satisfaction scores, Kempczinski said.

Plus, McDonald's faced tough comparisons its popular "Minecraft" movie tie-in from last April, and its World Cup campaign that launched during the last month of the quarter underperformed expectations.

If it succeeds at improving its operations and marketing, McDonald's is expecting its U.S. same-store sales to be back on track with its expectations in 2027.

There were some bright spots, like the launch of its new lineup of refreshers and crafted sodas. Kempczinski said the drinks are introducing new visits and lifting average customer check. In the coming weeks, McDonald's will also add Red Bull Energizers to its beverage options.

McDonald's saw stronger results outside of the U.S. Its international operated markets segment reported same-store sales growth of 1.5%, while its international developmental licensed markets division saw same-store sales rise 1.9%.

In June, the company revealed a new growth strategy at its biennial worldwide convention for franchisees. A new restaurant design, better-tasting food and drinks, consumer-led innovation, and improved customer service are the four cornerstones of the new plan. The chain wants to become diners' first choice, every time.

Executives also said that McDonald's now expects to reach 50,000 restaurants worldwide by the end of 2028, a slight delay from its prior projection of the end of 2027. CFO Ian Borden said the lag is due to the current consumer environment and inflation to development costs.