McDonald's Sales Drop for First Time Since 2003

Thursday, 08 Nov 2012 09:07 AM

 

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McDonald's Corp. says a key sales figure fell in October, marking the first monthly drop in nearly a decade for the world's biggest hamburger chain.

The company, based in Oak Brook, Ill., says global revenue at restaurants open at least 13 months fell 1.8 percent for the month. The last time it dropped was in 2003.

The figure is a key metric because it strips out the impact of newly opened and closed locations. The figures are a snapshot of money spent on food at both company-owned and franchised restaurants. They do not reflect corporate revenue.

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The fast-food chain says the figure fell 2.2 percent in both the U.S. and Europe. In the region encompassing Asia, the Middle East and Africa, it dropped 2.4 percent.

After years of outperforming its rivals, McDonald's has seen sales slow recently amid intensifying competition and a persistently weak economy. To rev up sales, the company has been working to emphasize value in markets around the world.

In the U.S., for example, McDonald's is stepping up advertising for its Dollar Menu after its attempt to market an "Extra Value Menu" for slightly higher prices fell flat. But the company said Thursday that the efforts were offset by "modest consumer demand" and competition.

In particular, McDonald's is facing stiffer competition from longtime rivals Burger King and Wendy's, which are both in the midst of reviving their brands with new ad campaigns and improved menus. Taco Bell, owned by Yum Brands Inc., is also enjoying growth with the help of new offerings such as it Doritos Locos Tacos and higher-end Cantina Bell bowls and burritos.

Additionally, people are increasingly flocking to restaurants such as Chipotle Mexican Grill Inc. and Panera Bread Co., which offer better quality food for a little more money. Still, McDonald's said it would remain focused on underscoring its value message in the U.S.

The same was true for Europe, where McDonald's gets 40 percent of its business. Amid the region's ongoing economic uncertainty, McDonald's said it would offer new meal combinations at various price ranges and continue remodeling restaurants.

Editor's Note: Prepare for Financial Pearl Harbor -- See Surprising Video With Steve Forbes

In the Asia, the company said it plans to differentiate itself with menu offerings tailored to local tastes.

McDonald's shares were down 61 cents at $86.23 in premarket trading. CEO Don Thompson had warned last month that sales were trending negative for the month.

© Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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