Have the Golden Arches Lost Their Shine?
McDonald’s (NYSE:MCD) warned last month that its same-restaurant sales would be down, and they were; the fight for diners interested in its hamburger offerings has taken its toll.
Sales at established restaurants worldwide fell 1.9 percent in January, a steeper drop than expected. According to Reuters, analysts polled by Consensus Metrix had forecast a drop of 1.1 percent. The results look particularly bad when compared to last year’s figure; a strong run last year produced a 6.7 percent gain in same-restaurant sales in January 2012.
But the lackluster economic growth has hurt even McDonald’s. While the chain has traditionally done well during periods of economic hardship — during 2008 it was one of just two companies on the Dow Jones Industrial Average to see its stock soar — diners spent cautiously this past month…
In Europe, McDonald’s top market, sales decreased by 2.1 percent thanks to weakness in German and France. In comparison, analysts had anticipated a gain of 0.1 percent. Sales in the United States were better than the expected 0.3 percent decline, as the Grilled Onion Cheddar Burger on the dollar menu helped send sales up 0.9 percent. The worst drop came in the Asia/Pacific, Middle East, and Africa region, where sales fell 9.5 percent.
Yum! Brands’ (NYSE:YUM) tainted chicken supply at its KFC restaurants in China did not help. While regulators cleared McDonald’s of charges that it served chicken laced with excessive growth chemicals, concerns over the safety of China’s chicken supply still hurt sales. That incident pushed down Yum’s same-store sales 6 percent in China.
Despite the decline, shares of the hamburger chain opened up slightly on Friday, at $94.74.
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