New York - The Golden Arches are
starting to lose some of their shine.
McDonald's Corp. said a key revenue
figure came in flat in July as diners pulled back amid a tough
economy. After years of outperforming expectations, even through the
recession, the stall is the latest sign that the world's biggest
hamburger chain is starting to feel the effects of the global
economic volatility.
In the US, the company said its
promotions failed to drive growth, and revenue at restaurant open at
least 13 months dipped 0.1%. The Oak Brook, Illinois-based company
also says it faced a tough comparison from a year ago, when it
launched the mango pineapple smoothie.
The figure dipped 0.6% in Europe
because of weakness in Germany and several Southern European markets.
It fell 1.5% in the Asia Pacific, Middle East and Africa region - a
key growth area for McDonald's.
Sales in Latin America and Canada,
which are not reported separately, helped pull overall results even
with last year.
Revenue in restaurants open at least 13
months is a key measure of a restaurant chain's performance because
it excludes the impact of recently opened or closed stores. It does
include the company's temporarily closed restaurants.
The figures are a snapshot of money
spent on food at both company-owned and franchised restaurants. They
do not reflect corporate revenue.
In economically hard-hit regions,
McDonald's has been working to emphasize the value of its meals to
get penny-pinching consumers to eat out more often. The company noted
last month that in Europe, which accounts for 40% of its business,
guest traffic was down in several regions.
With more than 33 500 restaurants
around the world, McDonald's is seen as a bellwether for the
industry.
The fast food chain has exceeded
expectations in recent years in large part by emphasizing value and
continually evolving its menu to keep up with changing tastes. Some
of its most successful new offerings in recent years, such as snack
wraps and specialty coffees, give customers a way to treat themselves
for just a few bucks. They also happen to have high profit margins.
But now the company is also facing
stiffer competition from newcomers such as Panera Bread Co. and old
rivals such as Burger King Worldwide Inc. and Wendy's Co., which are
revamping their menus and marketing to win market share. Last week,
Miami-based Burger King said that revenue at established restaurants
rose 4.4% in the second quarter.
Wendy's is set to report its quarterly
results Thursday.
McDonald's said last month said its net
income fell 4% in the second quarter as unfavourable currency
exchange rates and high costs ate into profits.
Shares of McDonald's fell $2.64, or 3%,
to $86.37 in premarket trading.
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