(Photo: Richard Drew, AP)
Ronald McDonald almost forgot what it's like to have indigestion - until now.
roaring through years of the economic downturn while most other
fast-food chains faltered, McDonald's on Thursday reported a 1.8% global
comparable sales drop for the month of October, marking the first time a
monthly decline has hit the company since March 2003 - when George Bush
was president. The decline was felt not just in the U.S. and Europe,
where sales fell 2.2%, but also in Asia, the Middle East and Africa.
McDonald's, the new reality of the tough global economic environment is
hitting home just months after new CEO Don Thompson took the helm.
Beyond the economic challenges worldwide, McDonald's also faces
increased competition domestically from Wendy's, Burger King and others.
the same time, the entire fast-food segment is slowly but steadily
losing market share to the slightly more upscale fast-casual segment
composed of chains such as Panera and Chipotle.
a general global consumer slowdown," says Steve West, analyst at ITG
Research. "I've never seen this much weakness so widespread for them."
value, new products also are critical, he says. And McDonald's is
"lagging significantly here right now," he says. This at a time Burger
King, Taco Bell and even Domino's "have stepped up their games," he
says. "McDonald's hasn't done anything of note since McCafe."
sales results reflect the "pervasive" challenges of the global
marketplace, says Thompson. "I am confident that our strategies and the
adjustments we are making in response to the current business headwinds
will build sales momentum and drive sustained, profitable growth."
That won't be simple.
decline took place during a month when the chain widely stressed value
promotions globally and during a month it rolled out its annual Monopoly
McDonald's stock closed at $85.13, down $1.73 or 2%.
month in the U.S. market, it will roll out one of its most popular
promotional menu items: McRib. That, inevitably, entices new
customers. But will it be enough to help turn things around?
Agee analyst Lynne Collier says, while she's "disappointed" with the
recent sales trends, "We continue to believe that McDonald's is the
best-positioned global competitor in quick-service restaurants."