McDonald's November sales miss as U.S. weakness persists

Mon Dec 9, 2013 6:04pm EST

1 of 2. A McDonald's restaurant's drive-thru sign is pictured in Los Angeles April 4, 2011.

Credit: Reuters/Mario Anzuoni

(Reuters) - 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.

(Reporting by Siddharth Cavale in Bangalore and Lisa Baertlein in Los Angeles; Editing by Saumyadeb Chakrabarty, Jeffrey Benkoe and Steve Orlofsky)

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Comments (16)
Overcast451 wrote:
Out of the last 5 times I’ve been to McDonalds:

The McRib wasn’t done all the way – tossed it out, nasty.
Fries/Hash browns have consistently been cooked in long since burnt fryer oil, nasty.
The coffee’s are never stirred or prepped properly.
An almost 4 dollar latte was nothing but sugar water.

Your food has always been fattening and now it’s also mostly gross anymore. You can’t make a coffee right – for four bucks, so I don’t even just stop for coffee anymore – I mean, for that price I can get a *good* one somewhere else.

And they wonder why sales are down?

I try to eat healthier anyway – so I don’t hit up fast food much anymore, but even the limited times I have – it’s *NOT worth it*. I’d rather pay more for quality somewhere else.

Maybe try paying your workers enough to care – perhaps? You make sick amounts of cash – but try to slave your workers for pennies… the resulting food clearly shows this.

Dec 09, 2013 11:08am EST  --  Report as abuse
bobinmo wrote:
Maybe the drop in sales is because people are learning “we really can” fix a much nicer meal at home at a much lower price per person? Call it a way of paying ourselves instead of paying someone else? A once a month swing by is great, but why would anyone want to fill themselves with food that’s mediocre at its best?

Dec 09, 2013 11:10am EST  --  Report as abuse
AlkalineState wrote:
The heart disease fad is dwindling.

Dec 09, 2013 11:33am EST  --  Report as abuse
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