Sales Decline, Not a Good Day for McDonald’s (NYSE:MCD)
Tuesday was not a good day for McDonald’s (NYSE:MCD) at all. Why? Because there had been a reported decrease by3.7% in comparable-store sales as reported by the fast food giant. Don Thompson, Chief Executive Officer for McDonald’s (NYSE:MCD) – the largest fast food chain in the world – was thus quite stressed as he tried to bring profits back for the burger beast company.
The decline was not seen in the United States rather it was in the area of Asia-Pacific due to a recent scandal of a prominent food supplier. The scandal was about food hygiene and it showed on live TV expired meat being repackaged and sold to MCD (NYSE:MCD). This report affected the comparable store sales and brought them down by 14.5%.
Lynne Collier, an analyst of Sterne Agee, stated to the investors that McDonald’s (NYSE:MCD) is not a reliable food source any more for the customers of Asia-Pacific. In the afternoon trading, market shares of McDonald’s (NYSE:MCD) decreased by 0.83%, which is 77 cents and came down to $91.72.
The sales decline was not restricted to only Asia-Pacific, but comparable store sales in the United States also decreased by 2.8%. As for Europe, thankfully the sales decreased by 0.7% only. These unsatisfactory results prompted Lynne Collier to state that the McDonald’s (NYSE:MCD) economy for the year 2014 will remain flat. The main reason is the absence of any particular stimulants that might affect sales in the coming months.
Well, it can be said that there are no signs for positive improvement at the McDonald’s (NYSE:MCD) front. The company, in U.S. market alone, has faced two consistent decrements in its comparable store sales and it seems to be very agonizing as it expects a third decrease. At the same time, other companies like Panera Bread or Chipotle are reaching to millennial heights. They realize the importance of better hygienic food hence their stocks are growing tremendously in the same market.
CEO Don Thompson stated that the company is eagerly trying to maneuver the market condition and to reclaim their strength after this storm. To achieve this purpose, a program called as ‘Build your own Burger’ has been launched in a few stores of Southern California. This will give a variety of options to the customers to choose from different sandwiches and toppings. However the company is reserved in trying this program in places other than California.
McDonald’s (NYSE:MCD) is also facing new brands in its competitor sphere, one of them being Taco Bell which has tried to peel away the morning customers from McDonalds (NYSE:MCD). However McDonald’s (NYSE:MCD) has formulated a counter strategy and will soon be offering free coffee every morning to captivate its potential customer’s attention and improve its business in turn.
This giveaway will start from September 16 and end on September 29. Other than free coffee, McDonalds (NYSE:MCD) has also started a promotion through social media called ‘Sip and Tell’, where customers are asked to describe morning moments that were embarrassing for them in a hope to regain customer goodwill.