McDonald’s falls short, warns of tough year

NEW YORK: McDonald’s Corp. is mixing up its menu to lure more customers but not enough of them are biting.
The world’s biggest hamburger chain reported a second-quarter profit that rose 4 per cent but fell short of Wall Street expectations.

It also said July sales are expected to be relatively flat and warned of a tough year ahead. Its stock edged down more than 2 per cent at USD 98.05 in premarket trading.

The company, based in Oak Brook, Illinois, says global sales edged up 1 per cent at restaurants open at least a year for the three months ended June 30.

The figure rose by the same amount in the US, where the company has been trying to adapt to changing eating habits with items such as its new chicken wraps and egg-white breakfast sandwiches.

But the tepid growth in the latest quarter reflect the challenges facing McDonald’s, which for years had been a standout in the fast-food industry.

Part of the problem is that economic conditions remain weak in many parts of the world. But another factor is that dining habits are changing, particularly in the US, with people increasingly opting for foods they feel are fresher, healthier or higher-quality.

CEO Don Thompson, who took over last summer, has said that the chain has a bigger product pipeline than in the past.
Thompson has noted that the company can capitalize on ideas from around the world and adapt them to other markets.
But for the first three months of the year, the company reported its first global quarterly sales decline at restaurants open at least 13 months.

For the latest quarter, the company said sales were down 0.1 per cent in Europe as results in Germany and France dragged down results from the United Kingdom and Russia.

In Asia, the Middle East and Africa, sales also dipped 0.3 per cent, primarily because of negative results in China, Australia and Japan.

For the quarter, the company earned USD 1.4 billion, or USD 1.38 per share. That’s up from USD 1.35 billion, or USD 1.32 per share, a year ago. -AP