McDonald's sales slump despite all-day breakfast success
An underwhelming financial report from McDonald鈥檚 comes after almost one year after the launch of the all-day breakfast menu that revived interest in the fast-food giant.
McDonald鈥檚 reported weaker than expected earnings on Tuesday, following a three percent drop in the fast food giant's shares during pre-market trading. The fast-food restaurant reported 3.1 percent growth in sales from existing stores; analysts surveyed by Consensus Matrix to see 3.6 percent growth. The company earned $1.25 a share, lower than the聽聽$1.39 a share. McDonald鈥檚 global sales grew by 3.1 percent, spurred by growth in Britain, Australia, and Canada.
The weaker than expected sales follows some of the best growth McDonald鈥檚 has seen in recent years. In this year鈥檚 first quarter, same-store sales for the company grew 6.2 percent, the fastest growth for the company in four years. Chief executive officer Steve Easterbrook has shifted McDonald鈥檚 to focus more on food quality and changing food trends since taking over in 2015
In a 2015 overview of Mr. Easterbrook鈥檚 vision for the fast-food restaurant, he cited the need to restructure McDonald鈥檚 for "stronger financial discipline, faster decision-making, and hard-edged accountability." Changes included refranchising 4,000 stores both in and out of the United States by 2018 and a change in headquarters from the suburbs of Chicago to a location within the bustling city. Recently, McDonald鈥檚 has offered franchise rights for restaurant locations in Malaysia and Singapore. Those changes have had a short-term negative financial impact, and McDonald鈥檚 stock value decreased by 20 cents per share in the second quarter.
McDonald鈥檚 financial report comes almost a year after the introduction of an all-day breakfast menu. Breakfast now accounts for 25 percent of the chain's overall revenue.聽
The all-day breakfast menu helped McDonald鈥檚 draw in new customers in the months following the launch. According to the NPD Group, a market research company, 30 percent of customers ordering from the all-day breakfast menu in December 2015 had not been a customer of McDonald鈥檚 in the previous month. The restaurant will be expanding the breakfast menu in September to include a wider variety of breakfast sandwiches, hoping the bigger breakfast menu will renew interest just as the launch did the year before.
McDonald鈥檚 focus on food trends has led the company to experiment with new products. There have been successful efforts by McDonald鈥檚 in Dallas to use fresh beef in Quarter Pounders. McDonald鈥檚 may expand this offering if safety standards can be met. McDonald鈥檚 also plans to end the use of milk and chicken with added hormones and antibiotics by 2018.
The disappointing sales report for McDonald鈥檚 has not dimmed Easterbrook鈥檚 vision for the company and its impending changes. Easterbrook said in a that the report of continued sales growth is "a clear indication that customers are responding to the steps we're taking to deliver the menu and value options they want at the convenience of McDonald's."
