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Loss of Cash: McDonald’s November Numbers Drop Low

By on December 10, 2013

by Lisa Baertlein

McDonald’s Corp (MCD.N) on Monday reported another sluggish month of sales at established restaurants, results that suggest the famed hamburger chain is losing U.S. market share to rivals.

The fast-food chain, the world’s largest by revenue, has struggled for more than a year to significantly increase those monthly sales, hindered by slack demand and intense competition for the business of budget-conscious diners.

November’s biggest disappointment came from the United States, where monthly sales at restaurants open at least 13 months fell 0.8 percent, versus the 0.3 percent gain expected, on average, by 14 analysts polled by Consensus Metrix.

“McDonald’s U.S. trends imply a rare period of share losses,” RBC Capital Markets analyst David Palmer said in a client note.

Wall Street initially expected the chain’s fortunes to turn this past spring because its results would be compared with weak monthly numbers starting in the spring of 2012.

But McDonald’s executives recently signaled that weakness would continue in the fourth quarter amid stiff competition and halting global economic growth.

Chief Executive Don Thompson, at the helm of McDonald’s for more than a year, has switched top management and shaken up menus to boost sales and profits. Still, analysts say the chain appears to be losing out to rivals at all meal times except breakfast – where it has long been a leader.

Some analysts worry that the company’s woes are the result of poor execution rather than external factors. In particular, they say, new menu items such as lattes, smoothies, salads and wraps have slowed McDonald’s service in a business where hyper-competitive drive-thru times are measured in the seconds.

McDonald’s latest move was to switch its value-oriented “Dollar Menu” to the “Dollar Menu & More” with slightly higher price points. U.S. diners’ response to that should show up in the December sales results.

“McDonald’s is still struggling more mightily than their Mighty Wings,” said ITG research analyst Steve West, referring to diners’ lackluster appetite for the company’s new chicken wings.

McDonald’s may have to boost promotions to improve sales, he said.

McDonald’s, which has roughly seven times the sales of Wendy’s Co (WEN.O) and Burger King Worldwide Inc (BKW.N) combined, has been slower than those rivals to tempt diners with limited-time specials and promotions.

Same-restaurant sales in Europe, which just edges out the United States as the top generator of revenue, rose a higher-than-expected 1.9 percent, with weakness in Germany more than offset by strength in the UK, France and Russia.

But declines in Japan weighed on comparable sales in the Asia Pacific, the Middle East and Africa region, which fell 2.3 percent. Analysts, on average, estimated a 0.7 percent decline. Sales in Japan have been weak for the past seven months.

Shares of the Oakbrook, Illinois-based company were down 1.1 percent $95.73 in midday trading.

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3 Comments

  1. Carl Thompson

    December 10, 2013 at 1:03 am

    If McDonald’s wants to recover sales it needs to:
    1. Remove all GMO from its products and promote them as GMO free.
    2. Replace the rotten meat, classed as unfit for human consumption and made edible only through treatment by ammonium hydroxide, from its products and replace it with premium-grade untreated meat.
    3. Use real chicken in the chicken nuggets, instead of the pink slime treated with ammonium hydroxide. Look up a demonstration by British chef Jamie Oliver who showed how the pink slime was made.
    4. Remove the trans fats from the fries and have only 100% non-GMO potato in the fries and hash browns.
    5. Remove all trans fats and aspartame from all products.
    In short, stop poisoning your customers, McDonald’s, and you might have a few more people interested in eating there.
    Finally, try paying your staff a living wage. That would also do wonders for your public image.

  2. Richard

    December 10, 2013 at 2:32 am

    Serve them right for not respecting a community’s wishes and trying to bully their way into Tecoma in the Dandenong Ranges where our council unanimoudly said NO! 9 out of 10 people in the community surveyed said NO! Yet they used their financial clout to get a higher authority VCAT to give them a permit. That is, despite the fact that its opposite a primary and preschool, near a national park and on a road which is going to increase traffic and make it an absolute nightmare. But do McDonalds care? Of course not? Only their profits and market saturation at the expense of our small community minded businesses. Their ethics are null and void. They have even threatened to sue community members for opposing them. McDonalds has shown their true colors and I refuse to ever spend a single cent their ever again!!!

  3. Marlene

    December 10, 2013 at 3:59 am

    I quit eating all fast food. The salt content is horrendous and I honestly believe the recipes have changed. The burgers have no flavor (except salt flavoring) and they make me sick to my stomach. As I said – not just McDonalds but all the major fast food chains literally make me ill. This – from a person who used to average 4-5 times a week eating fast food.

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