McDonald’s Corp. (NYSE:MCD) recorded low sales in the month of October, in nine years. Analysts attributed such volatility in sales to the struggling global economy and the associated economic hardships of the people in general. This has made people aggressive in getting deals and value meals and the restaurants have responded by keeping the prices low.
The cutthroat competition from its rivals, The Wendy’s Company (NASDAQ:WEN) and Burger King Worldwide, Inc. (NYSE:BKW) being another reason for MacDonald’s dipping sales. The premium low value meals being offered by its rivals have given McDonalds a run for its money.
According to analysts, it is a bit too early to rejoice McDonalds rebound. A months resulted cannot be taken as a trend. …Says ITG Investment Research analyst Steve West.
McDonald’s Corp. (NYSE:MCD) management has been prompt in addressing this warning signal. One week after the October low sales, Jeff Stratton, the company’s global restaurant officer, replaced John Field President of U.S business. The emphasis on low priced menu, such as the $1 Sausage McMuffins and coffee, helped the company to bounce back. Even though the analyst expected a small decline, U.S sales at established restaurants rose 2.5 %. Revamping its value messaging and focusing heavily on the Dollar Menu helped McDonald to boost up the sales. McDonald’s extra value meals like 20 Chicken Nuggets for $4.99 and the limited-time offerings have bolstered the sales. The sales are expected to rise further in December when they reintroduce McRibs to the menu.
Innovation being the mainstay of fast food chains, McDonald’s Corp. (NYSE:MCD) still needs to come up with new food launches to maintain its position of the industry leader. December will definitely see improved sales for McDonalds in the U.S.
Europe sales are up 1.4%. Sales in U.K and Russia were boosted by the limited time promotions. Sales in Germany and France have been flat.
Asia/pacific, Middle East and Africa showed 0.6% increase, compared to the average forecast of 0.9% decline. Japan still has shown no improvement despite introducing meals costing 100, 250 and 500 yen.
McDonald’s Corp. (NYSE:MCD) shares were up by 1.05% to close at $89.41, The Wendy’s Company (NASDAQ:WEN) by 0.64% to close at $4.74, and Burger King Worldwide, Inc. (NYSE:BKW) were up by 2.40% to close at $17.50.
