McDonald’s Corp.’s U.S. business continued to struggle in May, as same-store sales fell 2.2 percent amid declining traffic and intense competition, the company said Monday.
But global same-store sales fell only 0.3 percent, as sales improved in Europe but remained weak in Asia.
“McDonald’s has embarked on a turnaround plan to reignite our business performance,” McDonald’s CEO Steve Easterbrook said in a statement. “Our talented franchisees, suppliers and employees are placing renewed emphasis on the basics of great-tasting, high quality food, compelling value and outstanding service.
“Our goal is to be a modern, progressive burger company that is responsive to consumers’ evolving preferences, provides a contemporary experience for our customers and drives long-term value for our system and our shareholders,” he said.
The May report will likely be McDonald’s last monthly update, as the company recently said it would end its longtime practice of reporting monthly same-store sales, amid continued weak sales.
McDonald’s continues to blame “ongoing competitive activity” for its sales problem in the U.S. Chains such as Burger King, Sonic and Jack in the Box have eaten into McDonald’s market share in recent quarters, while convenience stores and even pizza chains have lured some business that would otherwise head for the Golden Arches.
McDonald’s struggles in its home market come despite numerous efforts to reverse the trend, including a Third Pound Sirloin Burger, with an ad campaign featuring the Hamburglar.
McDonald’s is working with other limited-time menu and everyday value offers. And it is testing several initiatives in an attempt to get customers back in the door. That includes a reduced drive-thru menu to simplify service at the spot where 70 percent of its customers get their food.
The company is also testing different burger customization platforms. And it is testing all-day breakfast, which started in San Diego and recently expanded into the Nashville, Tenn., market.
Deploying these initiatives across McDonald’s massive domestic restaurant base of 14,000 locations “may undoubtedly prove to be a legendary task,” Nicole Miller Regan, analyst with Piper Jaffray, wrote in a note Monday morning. “We believe partnering with the franchise community to be paramount in terms of positioning for long-term success.”
McDonald’s same-store sales increased 2.3 percent in Europe, which was better than analysts expected. It includes “strong results” in the U.K. and positive performance in both Germany and France, offset by slightly negative results in Russia. The company said everyday value offers and premium platforms, reinforced with effective marketing, helped drive demand.
In Asia/Pacific, Middle East and Africa, or APMEA, same-store sales fell 3.2 percent. Strong performance in Australia was offset by continued problems in Japan and China, which were hurt by food safety scares. The company has vowed to strengthen its quality and value perceptions in those markets.
The company said it had “solid” sales in other countries, which include Latin America and Canada.
Systemwide sales for the month decreased 7.2 percent, however, or 1.8 percent factoring out currency translation.
McDonald’s is reorganizing its global business to organize markets around their state of development, rather than geography. It is also eliminating layers of bureaucracy to cut spending by $300 million and enable markets to make quicker decisions.
Contact Jonathan Maze at [email protected].
Follow him on Twitter: @jonathanmaze
