McDonald's global sales dip in April

MAY 9, 201512:17 AM

[NEW YORK] US fast-food giant McDonald's, fighting sluggish sales, reported on Friday smaller-than-expected dips in global sales and in its key home market in April.

Chief executive Steve Easterbrook, the veteran British McDonald's executive who took the helm of the iconic American company in March vowing to turn it around, said the April sales numbers show "the significant work ahead." "We are moving quickly to deliver a better experience to our customers and to realize our vision to become a modern, progressive burger company," Easterbrook said in a statement.

Global comparable sales - sales at the burger chain's restaurants open at least 13 months - dipped 0.6 per cent in April, much smaller than the 1.9 per cent drop expected by analysts.

In its key US market, comparable sales fell for the 13th consecutive month, by 2.3 per cent in April, less than the 2.7 per cent decline estimated.

McDonald's cited fierce competition and falling customer traffic for the US weakness and said it was taking steps to boost sales, including offering a simplified menu.

Europe was a bright spot in April, with sales rising 1.0 per cent, lifted by gains in Britain and Germany that were partly offset by declines in France and Russia.

In the Asia-Pacific, the Middle East and Africa region, sales dropped 3.8 per cent.

Investors appeared to welcome the better-than-anticipated sales performance. Dow member McDonald's shares jumped 2.1 per cent to US$98.78 in morning trade amid a strong Wall Street rally after a solid US jobs report for April.

With 36,000 outlets in over 100 countries, the "Golden Arches" chain has been under pressure from falling customer traffic, with sales falling 2.4 per cent in 2014 to US$27.4 billion.

Earlier this week, Easterbrook unveiled a global turnaround plan to combat the slump which has reflected in part rising competition from restaurant chains perceived as offering healthier alternatives, such as Chipotle.

The company will reorganize its foreign market divisions currently based on geography with a breakdown reflecting similar economic and competitive dynamic factors.

The "international lead" segment will unite mature markets such as Australia, Britain, Canada, France and Germany. The "high-growth" segment will be those with higher expansion potential, including China, Italy, Switzerland, Russia and South Korea. Remaining regions will go into the "foundational" markets unit.

The overhaul also includes selling off 3,500 company-owned restaurants to franchisees by end-2018.

AFP