McDonald’s same-store sales off more than expected
By Melodie Warner
McDonald’s Corp.’s (NYSE:MCD) global same-store sales fell a bigger-than-expected 1.8% in October as the world’s largest fast-food chain struggles to combat slowing consumer demand amid ongoing economic uncertainty.
Analysts were expecting a 1.07% decline in global sales at restaurants that have been open at least 13 months, according to Consensus Metrix.
“Though October’s sales results reflect the pervasive challenges of today’s global marketplace, I am confident that our strategies and the adjustments we are making in response to the current business headwinds will build sales momentum and drive sustained, profitable growth,” said President and Chief Executive Don Thompson.
McDonald’s has been able to boost guest traffic and sales faster than most of its competitors with its expanding global operations and increasingly diverse menu, such as higher-margin products like blended-ice drinks. But austerity measures in Europe have contributed to slower global same-store sales growth in recent months.
Meanwhile, Burger King Worldwide Inc. (BKW) and Wendy’s Co. (WEN) are revamping their menus and updating their marketing campaigns, hoping to better compete with the fast-food giant.
McDonald’s said October systemwide sales fell 0.8%, or rose 0.6% in constant currencies.
Same-store sales in the U.S. fell 2.2%, missing the analysts’ estimate of a 1.05% decline. The company said modest consumer demand and heightened competitive activity offset the benefits from its local Dollar Menu advertising, the Monopoly promotion, and the recent launch of Cheddar Bacon Onion premium sandwiches.
In Europe, same-store sales declined 2.2%–below the analysts’ forecast for a 0.69% decrease–as positive results in the U.K. were offset by declines across many markets. McDonald’s said it intends to reinvigorate its value offerings in Europe through increased advertising and new meal combinations at various price tiers.
The Asia/Pacific, Middle East and Africa region posted a 2.4% decrease, topping the analysts’ projection for a 3.01% drop. The decrease reflects negative results in Japan, Australia and other markets, including China.
McDonald’s reported last month its third-quarter earnings fell 3.5% as currency fluctuations dented revenue and same-store sales grew slower than expected.