A slowdown in customers at its North American restaurants and elsewhere is biting into profits at the world’s largest fast food chain.
McDonald’s said Thursday sales fell 2 per cent at established U.S. locations, as featured menu offerings and promotions failed to live up to expectations against competitors.
The decline, which reflects softening demand across North America, contributed to a 13 per cent decline in McDonald’s second-quarter profit.
But sales are under pressure elsewhere, too. The sales figure rose 1.2 per cent in Europe but fell 4.5 per cent in the segment including Asia, the Middle East and Africa. On a global basis, the figure fell 0.7 per cent.
Looking ahead, CEO Steve Easterbrook said the company is seeing early signs of momentum and that global sales at established locations are expected to be positive in the third quarter.
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McDonald’s, which has more than 36,000 locations around the world, is trying to regain its footing after seeing its profit sink 15 per cent last year.
In the North America, the company is up against changing eating habits and intense competition. Last week, Yum Brands said Taco Bell sales at established locations rose 6 per cent for the quarter. The same figure rose 4.3 per cent at burrito chain Chipotle and 2.9 per cent at Dunkin’ Donuts.
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McDonald’s has admitted it created some of its own problems, such as letting its menu get too complicated. That affected wait times and order accuracy.
To adapt, McDonald’s is looking at ways to make its menu more flexible, such as serving popular breakfast items all day and letting people build their own burgers by tapping a touchscreen. It’s also trying to improve perceptions about the quality of its ingredients, and started a campaign last year inviting people to ask questions about its food.
Here’s a look at where McDonald’s sits among the biggest restaurant operators in Canada.
For the quarter ended June 30, the company earned $1.2 billion, or $1.26 per share. Analysts on average expected $1.23 per share, according to Zacks Investment Research.
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A year ago, the company earned $1.39 billion, or $1.40 per share.
Total revenue was $6.5 billion, ahead of the $6.45 billion Wall Street expected.
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