McDonald’s domestic same-store sales rose 0.4 percent in January, its second consecutive month of growth after more than a year of declines, parent McDonald’s Corp. reported Monday.
However, global same-store sales declined 1.8 percent on continued weakness in Asia.
“While the company’s January performance reflects current business challenges, McDonald’s structure and competitive strengths will provide the capability to change the trajectory of the business over the long term,” the company said in a release Monday.
Same-store sales declined 12.6 percent in the company’s Asia/Pacific, Middle East and Africa division, where a food safety scare hurt sales in China and Japan. McDonald’s said it is working to strengthen its quality and affordability perception in those markets.
Same-store sales rose 0.5 percent in Europe. McDonald’s said its U.K. and German restaurants performed well, offset by difficulties in France and Russia, where the chain has been caught up in global politics.
McDonald’s January sales results were released less than two weeks after CEO Don Thompson announced plans to retire. He will be replaced by Steve Easterbrook.
The company’s January sales were below expectations, said Baird analyst David Tarantino. He cited McDonald’s worse-than-expected Asia numbers, particularly in Japan.
“While we remain cautiously optimistic that planned initiatives can ultimately help restore better momentum, we believe efforts will take time to gain traction under new leadership,” Tarantino said.
But while problems in Europe and Asia can be explained by unforeseen circumstances, weakness in the U.S. is due to competition. McDonald’s said “aggressive competitive activity” has hurt its domestic restaurants.
McDonald’s noted that breakfast remained positive, continuing a trend over the past year in which the chain has been strong at breakfast but weak at lunch and dinner.
The company’s comprehensive plan to lift U.S. sales includes a “Pay With Lovin’” promotion in which customers can pay for their meals by dancing, hugging a loved one or expressing love to a parent.
McDonald’s eliminated some menu items, and is focusing on a menu that offers choices tailored to local consumer preferences. The company has reorganized its U.S. organization to provide different zones with greater autonomy on products and marketing.
The company is also beefing up its consumer-facing technology, and plans to expand a customized burger and chicken sandwich platform called Create Your Taste to 2,000 restaurants this year.
Contact Jonathan Maze at [email protected].
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