By Lisa Baertlein
Dec 9 McDonald's Corp 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
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-competitve 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
McDonald's may have to boost promotions to improve sales, he
McDonald's, which has roughly seven times the sales of
Wendy's Co and Burger King Worldwide Inc
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.