McDonald's (MCD) investors are looking for signs of growth in Q2 after consumers have been grappling with paying up for their Big Mac.

The Golden Arches is set to report its Q2 earnings Monday before market open. In an environment where diners are hyper-focused on getting the best deals, fast food restaurants have introduced a flurry of limited-time bundle deals. McDonald's recently announced plans to extend its $5 meal deal through August.

Given the deal launched toward the end of the quarter on June 25, Wall Street is setting tempered expectations.

The food giant is expected to post revenue of $6.63 billion, up 2.01% year over year, with adjusted earnings of $3.07, per Bloomberg consensus data. Same-store sales are expected to pop just 0.84%.

In the US, sales are expected to increase 1.04%, while internationally owned locations are expected to be up 1.85%. Its international franchised locations are expected to see a 0.41% decline.

McDonald's had a very successful Q2 last year, when the Grimace Shake promotion stole the show. That performance will be hard to beat. The chain posted Q1 results that missed revenue growth and same-store sales estimates across its segments, while its earnings also came below expectations.

"Sentiment here is low, with many believing near-term initiatives around value offering not enough of a traffic lift to offset mix headwinds," Citi analyst Jon Tower wrote in a note to clients.

"Longer-term investors see valuation as compelling," with the company's value plays "eventually" working, Tower added. But it's uncertain how long it'll take for US sales growth to "reaccelerate."

"Sentiment on McDonald's is cautious into a tough second quarter print with concerns on weak US and international same-store sales growth," Deutsche Bank analyst Lauren Silberman wrote in a client note.

Many have their eyes on McDonald's outlook for the second half of the year, and whether McDonald's can regain momentum in sales growth and foot traffic.

A bump from its $5 meal deal could help. Per a memo obtained by Yahoo Finance, 93% of all McDonald's restaurants voted to extend the $5 meal deal, originally limited to July.

The company's US chief marketing officer, Tariq Hassan, said the deal successfully drove foot traffic back from competitors and boosted the brand's affordable image after several price hikes. Customers drawn in by the deal may try other pricier items too.

When the offering rolled out formally on June 25, foot traffic was down 0.8% that week year over year, per Placer.ai. Traffic was subsequently up 2.8% the week of July 1 and up 2.4% the week of July 8 compared to last year.

BTIG analyst Peter Saleh told Yahoo Finance the promotion may even be extended to September while McDonald's works on a permanent value platform like buy one, get one, or a version of the $1 $2 $3 Dollar Menu.

"This is kind of their bridge to that value menu," Saleh said prior to the extension announcement. He added that franchisees are learning that the $5 deal, which consists of a choice of McDouble burger or McChicken sandwich, four-piece chicken McNuggets, small fries, and a small soft drink, is "too narrow" and "doesn't allow the customer to have a ton of variety."

A longer run of the $5 deal could also exert pressure on margins.

"Franchisees are telling us that ... their margins are being impacted by [the deal], and it's making this a lot less profitable, or in certain cases, not profitable at all," Saleh said. Some franchisees are pulling back on marketing for the deal, like video ads on the in-store screen or signage on the windows.

Here's what Wall Street expects from McDonald's in Q2, per Bloomberg consensus data, compared to Q2 of 2023:

• Revenue: $6.63 billion compared to $6.5 billion

• Adjusted earnings per share: $3.07 compared to $3.17

• Global same-store sales growth: 0.84% compared to 11.7%

  • US same-store sales growth: 1.04% compared to 10.3%

  • International-owned same-store sales growth: 1.85% compared to 11.9%

  • International franchised same-store sales growth: -0.41% compared to 14%

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Brooke DiPalma is a senior reporter for Yahoo Finance. Follow her on Twitter at @BrookeDiPalma or email her at [email protected].

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