McDonald’s has decided not to reduce its advertising spending, in the wake of the financial crisis, to offset the impact of rising food prices, according to a new internal memo obtained by Business Insider.
In a memo sent to management on February 10, McDonald’s senior vice president of marketing and advertising Craig Schoeller wrote that “there is no real appetite” for advertising reductions, but “we may consider some other revenue streams” if food prices continue to rise.
The decision comes as McDonald’s faces increased competition from other fast food chains, which are increasingly relying on advertising for growth.
McDonald’s shares closed at $62.49 on Monday, up about 2.5% on the year.
The company said its revenue from advertising last year grew 9% to $10.1 billion.
The memo came after McDonald’s reported weak revenue growth and lower-than-expected earnings for the quarter, as the company struggled to keep its restaurants open amid the global economic recession.
McDonald’s had to close over 1,500 stores, with only 1,821 open as of February, compared to 1,721 closed in 2015.
It said it expects its overall restaurant revenue to fall 8% to 10% in fiscal 2018.
Shares in the company were down nearly 4% in late-afternoon trading on Monday.
The timing of McDonald’s decision to cut advertising, which is normally the company’s first priority, comes after the U.S. economy has been hit hard by the financial crash.
The slowdown in the economy has hurt McDonald’s margins and also forced the chain to cut wages and service prices.