McDonald’s, the world’s largest restaurant chain, posted its worst monthly US sales decline in more than a decade and said a health scare in China took a toll on profit this quarter.
US sales at stores open at least 13 months fell 4.6 per cent last month, the Oak Brook, Illinois-based company said today in a statement. Analysts had projected a 1.9 per cent decline, according to Consensus Metrix. The news sent the stock down as much as 3.7 per cent, the biggest tumble in two years.
McDonald’s, which has more than 14,200 domestic restaurants, is struggling to compete with fast-casual chains like Chipotle Mexican Grill. It’s also lost its reputation as the low-price leader, sending value-minded diners to rivals such as Burger King Worldwide and Wendy’s, said Will Slabaugh, an analyst at Stephens Inc in Little Rock, Arkansas.
The US sales drop marked the seventh straight month of declines and was the steepest since at least 2003, according to data from Consensus Metrix. The company had posted a 1 per cent drop for October. Global same-store sales fell 2.2 per cent last month, worse than the 1.7 per cent drop predicted by analysts.
The company also is reorganizing its US operations and marketing as it seeks to boost sales.
“Today’s consumers increasingly demand more choice, convenience and value,” Chief Executive Officer Don Thompson said in the statement.
Though sales aren’t shrinking as much globally, McDonald’s faces several challenges in its overseas markets -- including a scandal in China and mounting geopolitical tensions in Russia.
Sales in Europe fell 2 per cent in November, hurt by “very weak” results in Russia and a slump in France and Germany, McDonald’s said. More than 200 McDonald’s restaurants in Russia are under government investigation in what has been described as retaliation for sanctions imposed by the US and Europe over Moscow’s role in the Ukraine crisis.
In Asia, the Middle East and Africa, sales dropped 4 per cent. In July, the main supplier for McDonald’s in Shanghai was accused of selling expired meat, leading to a plunge in sales. McDonald’s Japan unit, which sourced chicken nuggets from the same vendor, has forecast a full-year loss due to the case.
McDonald’s sales in Japan fell 12 per cent in November, according to a separate statement, underscoring the impact of the distributor scandal.
Bloomberg News, edited by Hospitality Ireland