McDonald's reported a second consecutive quarter of global sales decline, with a 1,5% year-over-year decline in the third quarter, better than the 0,6% forecast. The decline, which follows a 1% decline in the second quarter, is attributed to weak demand in key international markets, such as France, the United Kingdom, the Middle East and China, where consumers, especially those with low incomes, continue to suffer from food inflation.
Despite a 3% increase in quarterly revenue to $6,9 billion, net income fell 3% to $2,26 billion, below expectations. To address the decline, the company expanded its $5 meal offering in the U.S., a strategy that led to a 0,3% increase in comparable sales at its approximately 13.500 U.S. restaurants, reversing a decline in the previous quarter.
Hopes for a recovery were dashed, however, by an outbreak of E. coli linked to onions used in some hamburgers, detected after the quarter ended. The company identified the supplier and resumed sales of Quarter Pounders in the affected region.
International sales, which include restaurants that have been open for at least 13 months, fell 2,1% in markets where McDonald's operates directly, with France and the United Kingdom contributing the most to the decline. In licensed markets, sales fell 3,5%, also due to conflict in the Middle East and weak sales in China, while the Latin American business showed signs of growth.
To boost sales, McDonald's has launched collectible mug sets in 30 countries, a move that Bernstein Research says could boost global sales. As of June, McDonald's had 42.406 restaurants worldwide, 95 percent of which were franchises.
