Fast Food: McDonald’s works on a new plan
Fast Food

McDonald’s works on a new plan


USA, Oak Brook, Ill. Executives of McDonald’s Corp. are still looking for growth in the United States, where comparable sales declined 2.6% in the recent quarter. In the last year the fast-food chain has launched a number of initiatives to improve the business, including cutting menu items to simplify operations, adding menu items to drive demand, investing in digital technology, raising employee wages and closing underperforming restaurants.

More recently, McDonald’s began testing all-day breakfast and build-your-own burgers in select markets and is working to remove controversial ingredients from menu items, such as artificial colours, flavours and preservatives from grilled chicken. In a conference call on 4 May, the company plans to share initial details of yet another turnaround plan with the investment community.

For the first quarter ended 31 March, McDonald’s had net income of $811.5 mill. down 33% from $1,204.8 mill. in the prior-year period.

Around $195 mill. were used for of strategic charges taken in the quarter to optimise the business.” The charges included asset write-offs related to refranchising and the closing of approximately 350 unprofitable restaurants in Japan, China and the United States.

Revenues totaled $5,958.9 mill., down 11% from $6,700.3 mill. in the comparable quarter. Foreign currency translation negatively affected reported revenues by $700 mill.

Global comparable sales decreased 2.3%, as traffic fell in all major segments.

Comparable sales in the United States declined on slipping traffic and sales. Operating income fell 11%, reflecting weak sales and the effect of restructuring and restaurant closing charges.

In Europe, comparable sales declined 0.6%, as positive performance in the United Kingdom was more than offset by weakness in France and Russia. Operating income dropped 20%, or 4% in constant currencies, due to soft consumer sentiment and currency headwinds in Russia and ongoing macroeconomic challenges across much of Europe.

Comparable sales in the Asia Pacific, Middle East and Africa region declined more than 8% on consumer perception issues in Japan, where sales declined 32%, and negative but improving performance in China, where sales fell 4.8%. Operating income tumbled 80%, or 77% in constant currencies, as the result of strategic restaurant closings and other charges.

McDonald’s executives declined to provide an update on the company’s full-year financial outlook but warned of negative global comparable sales in April.

Source: McDonald’s