Why McDonald’s Can't Sell Enough Mighty Wings

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Jan. 23 (Bloomberg) -- McDonald’s , the world’s largest restaurant chain, posted fourth-quarter profit that was little changed from a year earlier as U.S. same-store sales fell amid shaky consumer confidence and increased competition. Alix Steel reports on Bloomberg Television's "Bloomberg West." (Source: Bloomberg)

That same-store sales missed estimates despite all the new promotions and products for mcdonald's. what stands out for you?

That's the real issue.

Yes, they beat out earnings and were late on revenues but the real issues were on the same store sales.

U.s. continues to be a weak spot and where they get a 1/3 of their revenue.

Overall globally it was same store sales were down .1% and looking for positive increase and remains an issue and boils down to not having the right innovation and product, not being able to woo those new customers.

How important are these new products?

We did stories on the mighty wings and mcwraps and stories on the fact mcdonald's were coming out with pumpkin flavored lattes.

How is important are new products?

They went from making $1.5 million a store to $2.7 million a store in the last five years and that is due to those new products.

They're trying to get new people in, they want to make more money and currently their core base is working men.

But at the core of it, where they make most of their revenue are the same old-same olds, burgers and chicken.

It's hard to find this data.

We did get some proprietary data and chicken and burgers represent sales and if you look at the breakfast menu, they get a bulk of their revenue and 18% are higher margins because eggs are cheaper to buy and not a lot of labor.

You look at value meals, that's a huge driver for mcdonald's. you don't make a lot of money on your value meals and $1 to $2 and if people aren't trading up to buy more expensive burgers like the angus burger which they took off their menu.

I want to bring it back to the mighty wings because i don't eat chicken but the mighty wings people were promoting heavily and people were excited they were timing the mighty wings for the beginning of football season but doesn't seem to have panned out for mcdonald's as a winner.

Why not and why is it hard to come up with a new product that works?

20% of their wings were stuck and left over with 10 million pounds of wings.

From s&p capital they say they won't throw them out but maybe promote them.

Mcdonald's winds up buying really big chickens because they utilize a lot of the parts and the wings happen to be very large and why they wound up charging so much money, $1 a wing which was too expensive for most people.

The issue how they're struggling with finding the right product, it's not just finding what you want to eat but they have to make it profitable.

It can't be very labor intensive.

That's a big issue.

And import costs are a big issue as well.

Mcdonald's isn't very flexible because they're so heavily franchised and often difficult in implementation.

My sources tell us they're facing stiff competition for burger king.

And wendy's and dunkin' donuts.

For a new rib sandwich.

Alix steele will be back with more.

"money moves" up next.


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


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