McDonald’s U.S. same-store sales fell 1 percent in October, and the company today pointed to “strong competitive activity” for the decline.
Still, the results were better than analysts expected, though they noted that it’s too early to tell whether the Oakbrook, Ill.-based burger chain was starting to recover.
Overall, global same-store sales fell 0.5 percent for McDonald’s, and the chain struggled in its key markets. In Europe, same-store sales fell 0.7 percent in October. And in Asia, the Middle East and Africa, same-store sales declined 4.2 percent for the month.
The decline came after a tough third quarter, in which same-store sales fell 3.3 percent both globally and in the U.S. In September, domestic same-store sales fell 4.1 percent, in the chain’s worst monthly performance since 2003.
The October results were seen by some as an improvement. Stifel analyst Paul Westra said that the sales were “better than feared,” given that Wall Street estimates predicted the chain’s sales would fall 1.9 percent in the U.S. Westra said he is “encouraged by across-the-board sequential improvement” from McDonald’s in the month.
But Bernstein Research analyst Sara Senatore said in a note that though the sales were ahead of estimates, it’s too early to call the results a turnaround. She noted that without clear efforts by McDonald’s to drive sales, Bernstein remains “unconvinced of a substantial reacceleration in results.”
McDonald’s weakening results have come just as competitors Burger King, Sonic Drive-In, Jack in the Box and others have seen sales improvement. In response, McDonald’s reorganized its domestic organization, creating four “zones” that will have more autonomy to run some of their own programs and promotions.
The company also said that it plans to simplify its menu and revamp marketing, and it’s planning to expand its test of a new build-your-own burger concept in three markets.
As for Europe, results in the United Kingdom were “solid,” according to the company, but were “more than offset by very weak results in Russia,” due to temporary restaurant closures there after government investigations of alleged hygiene violations.
In Asia, the chain’s sales have struggled due largely to a scandal over supplier food safety.
McDonald's has more than 35,000 locations in more than 100 countries.
Contact Jonathan Maze at [email protected].
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