McDonald's sales drop for first time since 2003
NEW YORK -- McDonald's Corp. is having trouble stomaching the competition.
The world's biggest hamburger chain said Thursday that a key sales figure fell for the first time in nearly a decade in October, as it faced the double whammy of a challenging economy abroad and intensifying competition at home. The company, based in Oak Brook, Ill., says global revenue at restaurants open at least 13 months fell 1.8 percent for the month. The last time it dropped was in March 2003.
The figure is a key metric because it strips out the impact of newly opened and closed locations. It's a snapshot of money spent on food at both company-owned and franchised restaurants and does not reflect corporate revenue.
McDonald's says the figure fell 2.2 percent in both the U.S. and Europe in October. In the region encompassing Asia, the Middle East and Africa, it dropped 2.4 percent. CEO Don Thompson cited the "pervasive challenges of today's global marketplace" for the declines.
After years of outperforming its rivals, McDonald's has been hitting some road bumps recently, with longtime rivals such as Burger King and Wendy's Co. reviving their brands with improved menus and new TV ad campaigns. Taco Bell, owned by Yum Brands Inc., is also enjoying growth with the help of new offerings such as it Doritos Locos Tacos and higher-end Cantina Bell bowls and burritos.
Additionally, people are increasingly flocking to restaurants such as Chipotle Mexican Grill Inc. and Panera Bread Co., which offer better-quality food for a little more money. The broader fast-food landscape has been undergoing changes over the past several years too, with the rise of chains such as Subway and Starbucks.
On Thursday, McDonald's said it would remain focused on underscoring its value message.
In the U.S., for example, the company is refocusing on the Dollar Menu, which was introduced about a decade ago. The move comes after an attempt to shift customers to an "Extra Value Menu," which charges slightly higher prices, fell flat.
The Extra Value Menu was intended to give McDonald's greater pricing flexibility, rather than being boxed in by the $1 price. With the Dollar Menu, the company has had to swap out many items over the years as costs for ingredients have climbed. When the Dollar Menu was first introduced, for example, the flagship offering was the Big 'N Tasty, made with a quarter-pound beef patty. But earlier this year, McDonald's even took its small fries off the Dollar Menu.
In October, McDonald's said that marketing for its Dollar Menu in the U.S. was offset by "modest consumer demand" and heightened competition. Moving forward, the company said it would continue its everyday value marketing.
Andy Barish, a Jefferies analyst, noted that the disappointing results were despite a Monopoly promotion and the launch of its Cheddar Bacon Onion sandwiches. Barish also said McDonald's could face a tough fourth quarter given the challenging economic climate - even with the periodic appearance of its popular McRib sandwich scheduled for later this month.
In Europe, where McDonald's gets 40 percent of its business, McDonald's said it would offer new meal combinations at various price ranges amid ongoing economic uncertainty, and continue remodeling restaurants. The company said positive results in the United Kingdom were offset by declines across many other regions.
In Asia, the company said it plans to differentiate itself with menu offerings tailored to local tastes.
The company noted that the results were hurt by a calendar shift, with this year's October having one less Saturday and Sunday and one more Tuesday and Wednesday. Restaurants typically rake in more sales on weekends.
McDonald's shares were down 61 cents at $86.23 in premarket trading. The company, which has more than 34,000 locations worldwide, had warned last month that sales were trending negative for the month.
Show commenting policy
TribLive commenting policy
You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.
We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.
While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.
We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers.
We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.
We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.
We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.
We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.
- Steelers activate Pro Bowl center Maurkice Pouncey
- Broken water main creates sinkhole that swallows truck in Overbrook
- Pirates send Decker to Indy to clear roster space for Morse
- Former Pennsylvania Sen. Richard Schweiker dies at 89
- Large crowd mourns woman allegedly killed by escapee
- Steelers’ Harrison awaits go-ahead from Tomlin before practicing
- Pittsburgh Police looking for dark blue BMW that hit cyclist in East Liberty
- City Council approves ordinance requiring paid sick leave
- Heroin, marijuana found in car, driver arrested
- Slot cornerback Boykin should give Steelers options in secondary
- Pirates pitcher Burnett could return in 4 weeks