McDonald's Monthly Sales Fall for First Time in Nine Years

Fast Feeder Plans More Promotion for Dollar Menu, Rollout of New Menu Items in 2013

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McDonald's Corp., the world's largest restaurant chain, said sales at stores open at least 13 months fell 1.8% in October, the first monthly decline in nine years, as U.S. customer traffic decreased.

Analysts projected a drop of 1.1%, the average of 14 estimates compiled by Consensus Metrix. Sales at U.S. locations slid 2.2% last month, Oak Brook, Ill.-based McDonald's said today in a statement. Analysts also estimated a decline of 1.1% for stores there.

Chief Executive Officer Don Thompson, who took the helm in July, said last month that the company will advertise its Dollar Menu more to draw value-conscious Americans. McDonald's, which gets about one-third of its revenue from U.S. stores, will also market new food items in 2013, he said.

"McDonald's has been taking share from everyone for many, many years," Peter Saleh, a New York-based analyst at Telsey Advisory Group, said in an interview. The competition is "fighting back a little bit."

McDonald's global monthly same-store sales last declined in April 2003.

The shares fell 0.3% to $86.60 at 9:30 a.m. in New York. McDonald's slid 13% this year through yesterday.

McDonald's rivals have recently advertised new items. Burger King Worldwide Inc. is promoting a gingerbread cookie shake and a Wisconsin white cheddar burger. Wendy's has a new bacon portabella melt, while Taco Bell has been marketing its higher-priced Cantina Bell menu along with Doritos Locos tacos.

Stores in the U.S. saw "modest consumer demand and heightened competitive activity" in October, McDonald's said in the statement.

The Big Mac seller will face "even more pressure on November" same-store sales and struggle to report positive U.S. comparable-store sales until April, Mr. Saleh said.

McDonald's comparable-store sales decreased 2.2% in Europe and 2.4% in the company's Asia Pacific, Africa and the Middle East region. Analysts estimated drops of 0.7% and 3%, respectively, according to a survey by Consensus Metrix, which is owned by Wayne, N.J.-based Kaul Advisory Group.

Same-store sales declined in China, where McDonald's plans to have 2,000 stores by the end of next year, the company said in the statement. Sales fell 7.2% in Japan last month.

Comparable-store sales are considered a key indicator of a retailer's growth because they include only older locations.

McDonald's has about 34,000 restaurants worldwide.

~Bloomberg News~

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