Fast food group McDonald’s posted a smaller-than-expected drop in worldwide sales at established restaurants in May after a lift from value meal deals in Europe helped offset continued weakness in the United States, its top market for profit.
The world’s biggest restaurant chain by revenue is fighting to lure back customers lost to slower service, more nimble rivals and increasing consumer demand for fresh, less processed food.
Global sales at McDonald’s restaurants open at least 13 months fell 0.3 per cent in May, marking a full year of monthly sales declines. But the figure was better than analysts’ projections.
Europe sales were up a better-then-expected 2.3 per cent, helped by strength in Britain, Germany and France, where it promoted both “everyday value” and premium food. Analysts had expected sales in Europe to rise just 0.6 percent.
US same-restaurant sales were down 2.2 per cent. Traffic to its domestic restaurants fell again as rivals, ranging from sandwich chain Chick-fil-A to burrito seller Chipotle Mexican Grill, continued to pick off customers. Analysts had expected a drop of 1.7 per cent.
McDonald’s USA is running a variety of tests aimed at luring back customers. Those include extended breakfast hours, custom burgers and new food such as breakfast bowls made with kale and spinach. Frustrated franchisees are clamoring for the company to trim and simplify its massive menu, which they blame for service slowdowns that turn off diners.
May sales fell 3.2 per cent in the Asia Pacific, Middle East and Africa (APMEA) region, less than analysts’ estimate for a 3.8 per cent drop. Results from Japan and China, which are still grappling with the fallout from food safety scandals, were a drag on those results.
McDonald's new chief executive Steve Easterbrook recently said the fast-food giant would join other companies that report only quarterly same-store sales. June will be the final monthly sales report for the chain. Most major US restaurants and retailers, including Wal-Mart Stores, Target and Starbucks report only monthly same-store sales.
Those companies say monthly sales reports add costs and put too much emphasis on short-term performance. – Reuters
