UPDATE 2-McDonald's U.S. sales continue to struggle in February

Mon Mar 10, 2014 10:10am EDT

By Phil Wahba

March 10 (Reuters) - McDonald's Corp on Monday reported a bigger-than-expected drop in comparable global sales for February, hurt again by slow business in the United States.

The world's biggest restaurant chain by revenue said worldwide sales at restaurants open at least 13 months fell 0.3 percent last month. That was below analysts' average estimate for a fall of 0.1 percent, according to Consensus Metrix.

U.S. same-restaurant sales fell 1.4 percent, worse than the 0.6 percent decline that analysts had forecast.

McDonald's Chief Financial Officer Pete Bensen said in a press release that the unchanged global comparable sales so far this year "will pressure margins" in the first quarter.

McDonald's has reported nearly two years of turbulent sales at established U.S. restaurants amid sluggish economic growth, increased competition and internal missteps that have complicated its menus and slowed service.

That performance is heaping pressure on Don Thompson, the chief executive of McDonald's since July 2012, who will face new challenges this year.

Beef prices are hovering near record highs and expected to keep climbing. Labor costs also are increasing: several states have raised their minimum wage this year.

Thompson said in a statement that McDonald's is "intent on improving our business performance." McDonald's said it is trying to draw more customers by improving customer service and menu changes.

McDonald's is doubling down on breakfast and coffee to defend its No. 1 position in the United States as Starbucks Corp debuts new breakfast sandwiches and Yum Brands' Taco Bell chain gets into the game with food like waffle tacos.

McDonald's again blamed the intense cold and snow that hit large parts of the country, but analysts have been quick to point out that McDonald's less-affluent U.S. patrons are still getting pinched by sluggish job growth and stagnant wages.

In Europe, the company's biggest market by revenue, restaurant sales last month rose 0.6 percent. Sales were down 2.6 percent in the Asia Pacific, the Middle East and Africa (APMEA) region.

Analysts looked for Europe to be down 0.1 percent and for APMEA to drop 1.1 percent. Sales in Britain and France led the way in Europe, while poor business in Japan weighed down sales in Asia.

McDonald's shares were down 0.4 percent Monday morning.

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Comments (1)
eduardoinohio wrote:
Big Mac Shake and Fries over 6 bucks. I don’t think so. Cost to much to eat here folks.

Mar 10, 2014 10:30am EDT  --  Report as abuse
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