McDonald’s Monthly Sales Fall First Time in Nine Years

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McDonald’s Monthly Store Sales Fall First Time in Nine Years
A customer enters a McDonalds China Co. restaurant in Beijing. Photographer: Nelson Ching/Bloomberg

McDonald’s Corp., the world’s largest restaurant chain, said sales at stores open at least 13 months fell 1.8 percent in October, the first monthly decline in nine years, as U.S. customer traffic decreased.

Analysts projected a drop of 1.1 percent, the average of 14 estimates compiled by Consensus Metrix. Sales at U.S. locations slid 2.2 percent last month, Oak Brook, Illinois-based McDonald’s said today in a statement. Analysts also estimated a decline of 1.1 percent for stores there.

Chief Executive Officer Don Thompson, who took the helm in July, said last month that the company will advertise its Dollar Menu more to draw value-conscious Americans. McDonald’s, which gets about one-third of its revenue from U.S. stores, will also market new food items in 2013, he said.

“McDonald’s has been taking share from everyone for many, many years,” Peter Saleh, a New York-based analyst at Telsey Advisory Group, said in an interview. The competition is “fighting back a little bit.”

McDonald’s global monthly same-store sales last declined in April 2003.

The shares fell 2 percent to $85.13 at the close in New York. McDonald’s has slid 15 percent this year.

McDonald’s rivals have recently advertised new items. Burger King Worldwide Inc. is promoting a gingerbread cookie shake and a Wisconsin white cheddar burger. Wendy’s Co. has a new bacon portabella melt, while Yum! Brands Inc.’s Taco Bell chain has been marketing its higher-priced Cantina Bell menu along with Doritos Locos tacos.

Aggressive Competition

“Burger King has been revamping their menu and advertising like crazy,” Saleh said. “They’re getting more aggressive. And Taco Bell is getting more aggressive with advertising.”

Stores in the U.S. saw “modest consumer demand and heightened competitive activity” in October, McDonald’s said in the statement.

The Big Mac seller will face “even more pressure on November” same-store sales and struggle to report positive U.S. comparable-store sales until April, Saleh said.

McDonald’s comparable-store sales decreased 2.2 percent in Europe and 2.4 percent in the company’s Asia Pacific, Africa and the Middle East region. Analysts estimated drops of 0.7 percent and 3 percent, respectively, according to a survey by Consensus Metrix, which is owned by Wayne, New Jersey-based Kaul Advisory Group.

Same-store sales declined in China, where McDonald’s plans to have 2,000 stores by the end of next year, the company said in the statement. Sales fell 7.2 percent in Japan last month.

Comparable-store sales are considered a key indicator of a retailer’s growth because they include only older locations.

McDonald’s has about 34,000 restaurants worldwide.

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