What's Driving McDonald’s 'Lackluster' Earnings?

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April 22 (Bloomberg) -- Telsey Advisory Group Senior Restaurant Analyst Peter Saleh discusses his outlook for McDonald’s on Bloomberg Television’s “In The Loop.” (Source: Bloomberg)

Seeing increased competition in u.s. sales.

Peter joins us now.

What stands out in this quarter?

Not much.

It was pretty lackluster.

The guidance really unchanged from the full year.

I guess that is good news.

No change on the commodity costs in march.

Driven by europe getting a little better, the u.s. is still fairly weak.

Not getting any traffic in the u.s. at all.

The company made a lot of changes over the last couple years.

It seemed to boost sales growth but that has fallen off.

Are there new changes that are not taking hold or have we exhausted the last group of menu item changes that had success?

They have been so good for so long it is hard to stay on top.

They have 14,000 restaurants.

You have got to find a product that you can source to 14,000 restaurants that is also affordable, tough to do.

Keep in mind, mcdonald's is doing 1300 transactions a day per store on average.

They are doing a lot of transactions.

It is about finding the instrumental -- it is about finding the incremental transaction.

Talk about source as.

-- talk about store size.

It is really all the same size, they are remodeling stores around the world and the u.s. it is the incremental, through the drive through.

2/3 of business in the u.s. goes through the drive-through.

It is getting the speed of service as past as possible.

Adding one second or two seconds can drive traffic for them.

It seems like in reports you get a sense that the increase in numbers of drive throughs were responsible for growth in terms of revenue in the last five years or so.

Not every restaurant cnaan have a drive through.

In an airport or an area where you do not have land, you cannot have the drive through.

They tend to build a lot restaurants with drive through's. they generate a great return for them.

What about competition -- tocqueville and others?

-- what about competition, taco bell and others?

The big one is taco bell.

They are entering the break this category.

If they can make a splash and do this properly, they have to generate about $150,000 of incremental unit volume for each taco bell.

That is $900 million to $1 billion of revenue.

They have to take some share from mcdonald's, you see there ads, going right at mcdonald's. they have got to go after mcdonald's to be successful at breakfast.

I, this from the perspective -- i come at this as an san francisco media aelite, are there changes in the american public with fast food and the health benefit that are not available?

Everyone says they went to eat healthy, but the qsr space caters to value and convenience.

That will never go away.

Will there be a health component

This text has been automatically generated. It may not be 100% accurate.

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