McDonald's gets fewer visits in quarter, expects weak January

Thu Jan 23, 2014 1:33pm EST
 
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By Lisa Baertlein

(Reuters) - McDonald's Corp (MCD.N: Quote) reported weaker-than-expected quarterly sales at established restaurants on Thursday as fewer diners frequented the fast-food chain, and warned that sales would again fall short of analysts' expectations in January.

The world's biggest restaurant chain by revenue has reported disappointing sales for five straight quarters, hurt by self-inflicted operational stumbles, weak demand and intensified competition from resurgent rivals such as Wendy's Co WEN.O and Burger King Worldwide Inc BKW.N.

Indeed, efforts by Chief Executive Don Thompson to shore up earnings in the 18 months since he took the top job at the company - by tweaking menus and changing management - have not borne fruit.

The pressure is on him to boost McDonald's share price as well. The stock is up just 7 percent since Thompson became chief executive on July 1, 2012, well behind the 27-percent jump in the Dow Jones Industrial Average index, of which McDonald's is a component.

Analysts predicted that investors would give Thompson a bit more time to turn the company's fortunes before they begin to advocate for big changes.

"If McDonald's doesn't fix itself by the end of 2014, the drumbeat of activism will grow," Hedgeye Risk Management analyst Howard Penney told Reuters.

On a conference call with analysts, McDonald's executives said they "over-complicated" menus last year.

They vowed to re-engage customers this year with plans that include customizing sandwiches, emphasizing breakfast and coffee, and increasing marketing via mobile phones and other devices.   Continued...

 
A newly constructed McDonald's restaurant is pictured in Encinitas, California January 14, 2014. REUTERS/Mike Blake