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McDonald’s sales still down as a new CEO takes the helm

By
John Kell
John Kell
Contributing Writer and author of CIO Intelligence
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By
John Kell
John Kell
Contributing Writer and author of CIO Intelligence
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March 9, 2015, 9:07 AM ET
Macdonald's Restaurant In London
Cartons of McDonald's french fries sit at a restaurant in London, U.K., on Monday, Feb. 1, 2010. McDonald's Corp., the world's largest restaurant company, plans to increase its number of Russian outlets by 20 percent this year to capitalize on its fastest growing market in Europe. Photographer: Jason Alden/Bloomberg via Getty ImagesPhotograph by Jason Alden — Bloomberg via Getty Images
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McDonald’s may have a new CEO, but the fast-food chain’s U.S. sales woes remain firmly in place.

The restaurant chain on Monday reported a sharp 4% drop in domestic same-store sales for February, badly underperforming the 0.7% drop expected by analysts. The decline was due to “ongoing aggressive competitive activity,” according to McDonald’s (MCD).

In a prepared statement, McDonald’s made a vague promise to reassert itself as a “modern, progressive burger company.” But as per usual with monthly sales data reports, McDonald’s didn’t publicly outline the details of that strategy beyond promises to focus on elements that matter most to customers: “high-quality food and beverage” menu items and a compelling value.

McDonald’s has reported weak results at home for over a year, hurt by changing preferences as so-called fast-casual chains that churn out healthier meals quickly for just a few bucks more than what McDonald’s charges have taken some of the fast-food giant’s business. The company has a new CEO, Steve Easterbrook, who took over the reigns after a relatively short tenure by Don Thompson.

Ultimately, McDonald’s has been hurt by the fact that consumers are spending more money at chains like Chipotle (CMG) and Panera (PNRA), which sell items for slightly higher prices but promote a perception of quality that McDonald’s lacks. The company is also challenged by higher-end burger chains like Shake Shack (SHAK), though those chains are often tiny in size and are arguably targeting a different demographic with the sale of alcohol and other items not sold at McDonald’s.

The weak February sales signal that challenges that lie ahead for Easterbrook. McDonald’s has faced calls that the company’s board also needs a shake up, and the company is moving to improve its image by taking high-profile steps, including only serving antibiotic-free chicken, and later this year using milk from cows not treated with an artificial growth hormone. There were even rumors that surfaced today that McDonald’s could consider adding kale to its menus, though a McDonald’s spokeswoman said there wasn’t any news to share on that front.

Overall, McDonald’s same-store sales slid 1.7% across the entire corporation, worse than the 0.3% drop projected by analysts surveyed by Consensus Metrix. Same-store sales slipped 4.4% in the Asia/Pacific, Middle East and Africa region but rose 0.7% in Europe.

About the Author
By John KellContributing Writer and author of CIO Intelligence

John Kell is a contributing writer for Fortune and author of Fortune’s CIO Intelligence newsletter.

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