OAK BROOK Ill. A survey of 32 domestic McDonald’s franchisees that represent about 241 restaurants in the chain’s 14,000-unit U.S. system said March and April same-store sales may increase by under 1 percent from a year ago – the lowest such results in this survey’s three year history.
The poll is conducted by independent stock researcher Mark Kalinowski and the franchisees’ aggregate same-store sales forecasts have been within 1 percentage point of McDonald’s actual same-store sales results for 22 of the past 31 surveys. Kalinowski’s interviews with franchisees showed that they reported an aggregate same-store sales increase of 0.9 percent for March and expect to post an aggregate same-store sales uptick of 0.8 percent for April.
McDonald’s plans to release its March same-store sales figures as part of its first-quarter earnings report scheduled for April 22. April same-store sales are expected to be released next month.
The No. 1 burger brand and largest restaurant company, which has weathered the slumped economy better than many restaurant chains, reported weaker-than-expected same-store sales in January but rebounded with stronger results in February, although that month’s gain was aided by an extra operating day for the Leap Year. At press time, competitor Wendy’s was the only quick-service burger chain to report recent same-store sales results. The No. 3 chain recorded flat same-store sales at both corporate and franchised domestic units in March. For the quarter ended March 30, Wendy’s same-store sales fell 0.1 percent at domestic franchised locations and declined 1.6 percent at domestic corporate units.
In Kalinowski’s survey, certain McDonald’s franchisees, all of which were not identified, were quoted as saying that McDonald’s strategy of deep discounting, and sometimes giving away free menu items, is building traffic but destroying margins.
One franchisee mentioned that the new, specialty coffee offerings aren’t yet achieving the needed returns to pay for the required equipment remodels. The chain’s newest breakfast item, the McSkillet Burrito, also was mentioned as a product not driving traffic or sales. Certain franchisees said that the popularity of the chain’s Dollar Menu is driving traffic but would negatively affect earnings and restrain franchisees from making significant capital investment in their stores.
Top macro-economic concerns voiced by franchisees included highly escalated food costs and changing consumer spending habits.