McDonald’s Corp reported disappointing sales in January as better performance in Europe and the US could not offset the fallout of food scandals in China and Japan.
The worlds largest restaurant chain stated a 1.8% decline in global comparable sales, worse then projections of 1.2% drop in worldwide same-restaurant sales. The figure also represents the eight consecutive month of declines for the company.
McDonald’s said last month that sales in January will most likely fall short of expectations as Chief Executive Don Thompson passes leadership to old-time employee Steve Easterbrook after less than three years at the helm.
Mr. Easterbrook will take the wheel at a time when McDonalds is facing severe competition in its domestic market. The company is losing customers to the so called “fast-casual restaurants”, which are positioned between fast-food and casual dinners, including Five Guys and Chick-fil-A.
McDonalds is also facing growing health and obesity concerns among the younger generation, who prefer to buy food from restaurants like Chipotle Mexican Grill.
However, the company has been trying to counter that trend as it recently introduced new marketing campaign to revive its iconic “Im lovin it” catchphrase.
Additionally, McDonalds managed to accelerate its services by reducing menu products, after admitting that big and complicated menus increase waiting time. The company also added more ingredients for its customizable products to better fit the shifting preferences of its customer base.
The company reported a 0.4% increase in same-restaurant sales in the US as more customers relied on the fast-food chain to supply them with breakfast. On average analysts had projected a 0.3% gain for the month.
McDonalds stated a 0.5% increase in sales from its European operations, its largest market by revenue, as strong results from the UK and Germany offset lower numbers from Russia and France.
Same-restaurant sales dropped 12.6% in the Asia-Pacific, Middle East and Africa region, worse than the projected decline of 8.4%. The company contributed the fall to the food scandal in July, when one of McDonalds suppliers was found to be deliberately selling tainted meat.
McDonalds fell 0.37% on Friday and closed at $93.99 in New York. On Monday the stock lost 1.35% on $92.72 at 15:56 GMT, marking a one-year decrease of 3.32%. The company is valued at $91.47 billion.
According to the Financial Times, the 20 analysts offering 12-month price targets for McDonalds have a median target of $94.00, with a high estimate of $110.00 and a low estimate of $86.00. The median estimate represents a 0.01% increase from the last closing price.