In what pundits, analysts and investors alike are reading as a warning sign for the restaurant industry, McDonald’s monthly global same-store sales results were not positive for the first time in years.
One of the largest quick-service restaurant companies in the world, and one that had weathered the recession better than most, reported Wednesday that global same-store sales were flat in July, meaning no change from the same month last year. Same-store sales fell 0.1 percent in the United States, 0.6 percent in Europe and 1.5 percent in McDonald’s Asia-Pacific, Middle East and Africa region.
Since 2003, U.S. monthly same-store sales for McDonald’s had only seen negative territory once in 2008, twice in 2009 and once in 2010. Europe has posted a monthly same-store sale decline only twice since 2006.
“We view July as an overall reflection of a weak global macro environment,” John Ivankoe, a restaurant securities analyst at J.P .Morgan, said in a research note, adding that there are “clear [same-store sales] headwinds in the U.S. with a ‘lackluster’ consumer environment.”
For McDonald’s in particular, Ivankoe said the chain should also expect “stiffer competition than at any time in recent history from resurgent Burger King and Taco Bell … and possibly improving Wendy’s.”
In April, Oak Brook, Ill.-based McDonald’s reported second-quarter results that included the revelation of slower sales trends, which McDonald’s said was the result of a “slowing global economy [and] persistent economic headwinds.”
Still, at that time, the company expected positive results in July, as did Wall Street. McDonald’s miss led to a 1.7-percent stock decline on Wednesday, to a close of $87.53. The stock is hovering near its lower annual range, as it has traded between $83.61 and $102.22 during the past 52 weeks.
McDonald’s said its U.S. promotions, which included the new lower-calorie menu and Olympic branding efforts, “did not offset the effects of the sluggish economy.” Overseas, the company said Germany and Japan were the weakest pockets...
Source: Argentine Beef Packers S.A.
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