Industry News - PM

McDonald’s posts 21 percent drop in earnings


By Meatingplace Editors on 1/23/2015

McDonald’s Corp. said net income fell 21 percent in the fourth quarter and warned results would remain pressured in the first half of 2015 as the company works on reshaping its menu to revive sales.

Same-store sales declined 0.9 percent globally and 1.7 percent in the United States during the quarter as fewer customers visited McDonald’s restaurants amid tough competition from competing chains. Supplier issues in Asian markets and waning consumer confidence in Europe and Russia also hurt overseas sales.

McDonald’s said it expects same-store sales to be negative in January. “Our business continues to face meaningful headwinds,” Chief Executive Don Thompson said.

In the fourth quarter, McDonald's earned $1.1 billion, or $1.13 a share, down from $1.4 billion, or $1.40 a share, a year earlier.

The company said it is focused on becoming a more nimble organization with a strategy that involves simplifying its menu and catering to local customer tastes.

"As we begin 2015, we are taking decisive action to regain momentum in sales, guest counts and market share,” Thompson said.

Menu changes

McDonald’s Create Your Taste burger option, aimed at boosting sales of classic core products, has rolled out to 2,000 U.S. restaurants and is having positive results, Thompson said on a call with analysts.

“We are asserting McDonald's burger leadership by offering greater customization and choice,” the CEO said.

While the menu rationalization process is ongoing, the company also will launch new products on a national level this year and differentiated products in local markets, said Mike Andres, president of U.S. operations.

McDonald’s is working with its owner-operators to ensure its food quality meets consumer expectations, Andres said. “We have opportunities to clean up our ingredient list and enhance the taste,” he said.

Other efforts under way include analyzing menu pricing to encourage consumers to bundle products and self-serve kiosks and other initiatives to improve ordering.


 
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