McDonald’s profits fall as US diners stay away

Kasmira Jefford
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MCDONALD’S has suffered another sluggish quarter of sales in its key US market, dragging group profits down, as the fast-food giant struggled with fierce competition, weak consumer spending and a cold winter.

Group like-for-like sales rose 0.5 per cent but US sales fell 1.7 per cent, which the hamburger chain blamed partly yesterday on the “severe winter weather” prompting more consumers to stay at home.

The sales drop meant net income declined to $1.2bn (£710m) compared with $1.27bn a year earlier.

In Europe, like-for-like sales grew by 1.4 per cent as a strong performance in the UK, France and Russia helped offset a drop in people dining out at the group’s restaurants in Germany.

McDonald’s did not provide sales figures for its 1,200 UK sites, although UK chief executive Jill McDonald said it enjoyed its 32nd consecutive quarter of growth thanks to strong demand for new products such as its smoothies as well as its breakfast menu and its famous Big Mac.

“November marks our 40th anniversary in the UK, and we’re proud that sales across our core menu remain strong with the iconic Big Mac still one of our top selling menu items,” she said.

McDonald’s has reported two years of turbulent sales at established US restaurants due to sluggish economic growth, rising labour costs and stiff competition from rivals such as Burger King.

Chief executive Don Thompson, who took over the reins 18 months ago, has made efforts to shore up sales by changing the management team, introducing new products and menus such as the dollar menu in the US.

He announced further plans yesterday to launch a “reset initiative” that would include tweaking staffing to improve speed during peak hours and putting more focus on affordability and core menu items such as the Big Mac, which account for 40 per cent of sales.

“This is not about a silver bullet. It is important to underscore that it will take time for consumers to notice the changes and reward us with increased visits,” Thompson said yesterday.

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