McDonald's running low on quick fixes for U.S. sales

Tue Jan 22, 2013 2:05pm EST
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By Lisa Baertlein

(Reuters) - McDonald's Corp (MCD.N: Quote) is running out of quick-fix strategies for stemming declines in U.S. restaurant sales inflicted by tougher competition for customers who are pinching pennies in a weak economic recovery.

The world's largest restaurant chain by revenue welcomed customers on Christmas Day and shifted the limited offering of its cult favorite McRib sandwich into December to avoid a big year-end decline in its U.S. restaurant business. But, it appears the company has exhausted its supply of such tactics.

"There are no Band-Aids for January, February and March," said Richard Adams, a former McDonald's franchisee who now advises the chain's restaurant operators. "There's not too much they can do about it. There's no holiday they can stay open on."

McDonald's posts December sales and fourth-quarter earnings on Wednesday. Analysts on average forecast $1.33 a share, flat from a year earlier, according to Thomson Reuters I/B/E/S.

A bump in the road late last year endangered the company's established dominance over the fast-food industry and turned up the heat on Chief Executive Don Thompson.

Thompson took the helm in July, as rivals such as Wendy's Co (WEN.O: Quote) and Burger King Worldwide Inc BKW.N were making a comeback by mimicking McDonald's turnaround strategy with expanded menus, renovated restaurants and longer hours.

The CEO already has shaken up the executive suite, replacing the president of U.S. operations a week after the company in October reported a decline in monthly global sales at established restaurants - the first such drop in nine years.

Analysts and investors say McDonald's will keep using its size to its advantage. And, it should have an easier go of things in mid-2013, when the year-earlier impact of balmy winter weather wanes.   Continued...

A McDonald's restaurant's drive-thru sign is pictured in Los Angeles April 4, 2011. REUTERS/Mario Anzuoni