McDonald’s Global Sales Rise in May, as US Revenues Fall
McDonald's Corporation has announced that global comparable sales increased 0.9% in May of 2014. This was despite a 1% decrease in business rung up in the United States, where the company has experienced seven straight months without growth.
Positive performances in the company’s other major market segments were reported as follows: Europe, +0.4%; Asia/Pacific, Middle East and Africa (APMEA), +2.5%.
Disappointing results in the US, where the Oak Brook, Illinois-headquartered quick service restaurant company operates more than 14,000 units that generate about one-third of its annual revenues, were attributed to “ongoing broad-based challenges.”
A story in Fortune magazine, citing findings of equity research analyst Steve West of New York City-headquartered Investment Technology Group, Inc., suggested that curtailment of Dollar Menu offerings has had a negative impact on McDonald’s bottom line, as price-sensitive customers left the Golden Arches to grab deals at rival Burger King and Wendy’s. According to West, traffic at McDonald’s restaurants slipped by 3% following the cutback on $1 items.
Such consumer behavior would seem to indicate, notwithstanding government-issued statistics, that the Great Recession is far from over for many Americans who continue to pinch pennies to make ends meet. These would include under-employed persons who work less than 40 hours per week without benefits, as well as the long-term unemployed who have abandoned hope of finding a job that pays a living wage.
Meanwhile, McDonald’s announced in a June 9 press release that the company’s “US business is heightening its customer focus through service, value and menu initiatives to stabilize results. During May, these efforts were reflected in the promotion of Dollar Menu & More offerings and breakfast including a focus on McDonald's popular McCafé coffee.”
Looking further afield, Don Thompson, McDonald’s president and ceo, commented: "Around the world we are pursuing opportunities to provide our customers with their favorite food and drink, create memorable experiences, offer unparalleled convenience and become an even more trusted brand. We are intensifying our commitment to place the customer at the center of everything we do, and are determined to create experiences that deliver the most meaningful impact for our customers and our business."
McDonald’s comparable sales in Europe rose 0.4% in May, led by positive performances in the United Kingdom and France, which were partly offset by negative results in Germany. Unique affordability options, premium menu choices and expansion of the segment’s beverage business supported the month's results.
Comparable sales during the same month in the Asia/Pacific, Middle East and Africa markets increased 2.5%, reflecting strong results in China (including comparison against the prior year impact of Avian influenza), and positive performance across a number of markets, partially offset by ongoing weakness in Japan. Across the segment, APMEA remains focused on strengthening its value platforms, breakfast day part and convenience.
Systemwide sales for the month increased 2.4%, or 3.4% in constant currencies.