Bloomberg News

McDonald’s May Sales Rise 0.9% as Asia Cushions U.S. Drop

June 09, 2014

McDonald's Corp. Sales Rise 0.9% in May

A McDonald's Corp. Big Mac meal is arranged for a photograph outside of a restaurant in San Francisco. McDonald’s, which gets more than 30 percent of revenue from domestic locations, has struggled to attract Americans after slowing its kitchen last year with too many new and complex items. Photographer: David Paul Morris/Bloomberg

McDonald’s Corp. (MCD:US), the world’s largest restaurant chain, said sales at stores open at least 13 months rose 0.9 percent in May as a gain in Asia helped cushion a prolonged slump in the U.S.

Analysts estimated a 0.8 percent increase, the average of 15 estimates from Consensus Metrix. In the U.S., sales fell 1 percent, Oak Brook, Illinois-based McDonald’s said in a statement today. Analysts estimated a gain of 0.1 percent.

McDonald’s, which gets more than 30 percent of revenue (MCD:US) from U.S. locations, has struggled to attract Americans after slowing its kitchen last year with too many new and complex items. The chain also has faced more domestic competition as Burger King Worldwide Inc. advertises discounts and Taco Bell (YUM:US) sells new breakfast items, such as Cinnabon bites and waffle tacos.

“The industry is not very robust right now” in the U.S., said Peter Saleh, an analyst at Telsey Advisory Group in New York. Taco Bell’s entrance into breakfast “could be weighing on them,” and Wendy’s and Burger King’s improved food pose challenges as well.

Sales in McDonald’s Asia Pacific, Middle East and Africa region rose 2.5 percent, topping estimates, as positive results in China helped boost the division. In China, McDonald’s has focused on expanding its delivery and breakfast businesses and plans to open about 300 stores there this year.

McDonald’s shares (MCD:US) fell 0.2 percent to $101.78 at 9:32 a.m. in New York. They gained 5.1 percent this year through June 6, the most recent trading day, while the Standard & Poor’s 500 Restaurants Index advanced 2.4 percent.

Seven Months

May’s decline marks the seventh month without domestic growth for McDonald’s. Recently, the Big Mac seller has advertised breakfast items and gave away free McCafe coffees to attract American diners. It also began selling higher-priced bacon Clubhouse burgers and chicken sandwiches in the U.S. earlier this year.

Same-store sales rose 0.4 percent in Europe. Analysts estimated a 0.5 percent gain, according to Consensus Metrix, a researcher owned by Wayne, New Jersey-based Kaul Advisory Group. Comparable-store sales are considered an indicator of a retailer’s performance because they include only older, established locations.

McDonald’s, which has more than 35,400 restaurants worldwide, has had difficulty luring customers in Germany, where same-store sales slid last month. Meanwhile, it’s had success selling value lunch sandwiches in France and expanding its breakfast business in the U.K.

McDonald’s locations are about 81 percent franchised globally. The chain has said it may seek to franchise, or sell, 1,500 company-owned stores by 2016, mostly in Europe and its Asia Pacific, Africa and Middle East region.

The company plans to release second-quarter earnings on July 22.

To contact the reporter on this story: Leslie Patton in Chicago at lpatton5@bloomberg.net

To contact the editors responsible for this story: Nick Turner at nturner7@bloomberg.net Kevin Orland, James Callan


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Companies Mentioned

  • MCD
    (McDonald's Corp)
    • $96.22 USD
    • -0.78
    • -0.81%
  • YUM
    (Yum! Brands Inc)
    • $76.75 USD
    • 0.46
    • 0.6%
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