- Obama not worried about Ebola at upcoming African summit in D.C.
- Obama: ‘We tortured some folks’ after 9/11
- Obama administration asked whole D.C. Circuit to take on major Obamacare case
- Mark Levin: Topple GOP leadership or country will ‘unravel’
- Massachusetts to let police chief deny gun buys to those deemed unfit
- John Kerry condemns attack on Israeli soldiers, kidnapping
- U.S. starts to evacuate American Ebola patients from West Africa: Report
- Geraldo slammed as ‘dummy’ for backing Clinton’s bin Laden claim
- Israeli spokesman: No need to debate who broke the cease-fire
- 35 Palestinians killed; Israeli officer missing
McDonald’s sales slump not a reason for concern
Worldwide competition is increasing but golden arches still ranked No. 1
Question of the Day
McDonald's can’t sugarcoat its thus-far disappointing sales figures in 2013.
The world’s fast-food champion recently announced yet another monthly decline in sales amid growing talk in the market that diners’ changing habits, shrinking profit margins and growing problems in once-promising overseas markets have tarnished the gleam of the golden arches.
To make matters worse, fast-food competition is increasing, slowly chipping away at McDonald's market share.
But things might not be as bad as they seem on paper, analysts say. Despite the poor recent numbers, McDonald's is still the class of the industry, having sold more than $27 billion in food last year, more than double what Burger King and Wendy’s sell combined.
“McDonald's is comparing this year to last year, and last year was a pretty good year for them,” said Darren Tristano, an analyst at Technomic, a restaurant-consulting firm. “McDonald's is coming back down a little bit closer to where some of the other restaurants in the industry have been.”
For the first time in more than a decade, sales are declining at the world’s largest restaurant. It started in October and has continued in three of the first four months of 2013.
For the first quarter, sales fell 1 percent in the first three months of the year, compared to a 7.3 percent rise in 2012. In January, sales fell 1.9 percent compared to the same month in the previous year. In February, sales fell 1.5 percent. Sales were then up 0.3 percent in March, but down again in April by 0.6 percent.
While U.S. sales ticked up 0.6 percent last month, European sales were down 2.4 percent. Sales also fell 2.9 percent in the combined Asia, Middle East, and Africa regions.
In the meantime, the rest of the fast-food industry continues to expand. The National Restaurant Association forecasts the fast-food industry will grow by nearly 5 percent to $188 billion this year — though analysts call this “weak growth” compared to the “pre-recession” 6 percent to 7 percent growth it had become accustomed to just several years ago.
But Mr. Tristano cautioned investors not to overreact to the news about McDonald's. Anything less than a 2 percent decline is no big deal, he said, adding it will take more than a few bad months to bring down one of the most recognizable brands in America.
“Seeing a slight decline is not a concern,” Mr. Tristano said. “If you look at a long-term picture of what McDonald's has accomplished over the past five years in spite of the recession and economic situation, it doesn’t necessarily look like this is something to worry about.”
Mr. Tristano explained that McDonald's has done such a good job weathering the economic storm over the past few years that it is due for a down year — which is still better than an up year for most other restaurant chains, he pointed out.
“It’s just a point in time where things are starting to flatten out, and they’ve got to look for new and innovative ways to grow their sales,” he said.
The good news for fast-food lovers and investors alike is that innovation is exactly what McDonald's is focusing on.
“Around the world, we are focusing on each market’s unique issues and on driving sales and guest counts by enhancing the entire customer experience through the pillars of our ‘Plan to Win’ and our three global growth priorities,” McDonald's spokeswoman Becca Hary said in a statement.
© Copyright 2014 The Washington Times, LLC. Click here for reprint permission.
About the Author
Tim Devaney is a national reporter who covers business and international trade for The Washington Times. Previously, he worked for the Detroit News, Grand Rapids Press, Portland Press Herald and Bangor Daily News. Tim can be reached at firstname.lastname@example.org.
- Dysfunction, disarray at Homeland Security management cited in IG's report
- GM's Barra to be first woman to run top American carmaker
- Treasury sells last shares in 'Government Motors'
- U.S. businesses reach out quickly to partners in Iran
- General Motors ending Chevrolet sales in Europe to focus on Opel and Vauxhall
Latest Blog Entries
TWT Video Picks
By Orrin G. Hatch
Procedural changes impede the chamber's traditional deliberative function
- U.N. condemns Israel, U.S. for not sharing Iron Dome with Hamas
- Border agents cleared of civil rights complaints from illegal immigrant children
- Ben Carson takes major step toward presidential campaign
- Porn-surfing feds blame boredom, lack of work for misbehavior
- Obama military strategy too weak for future security, panel reports
- 'Big Bang' star Mayim Bialik helps send bulletproof vests to IDF
- Pentagon wants extra $19M to equip, train Ukrainian troops
- Ted Nugent slams 'lying freaks' at liberal media: I'm 'doing God's work'
- Feds raid S.C. home to seize Land Rover in EPA emission-control crackdown
- House backs faster deportations, cancels 'Dreamer' policy
Top 10 U.S. military helicopters
Obama's biggest White House 'fails'
Celebrities turned politicians
Athletes turned actors