Sales Fall at 'Broken' McDonald's

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McDonald's
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Not all is happy in McDonaldland.

McDonald's reported its first-quarter earnings Friday morning, and while profit rose slightly, comparable-store sales in the U.S. fell 1.2%. Things were even worse abroad, with comparable sales in Asia, the Middle East and Africa falling 3.3%.

In a statement accompanying the filing, McDonald's (MCD) CEO Don Thompson cited "global economic headwinds" and a "challenging eating-out environment."

The poor sales don't come as a complete shock. While the company reported improved profits in the fourth quarter of 2012, it also saw sales decline in key foreign markets and dealt with a drop in operating profit margins.

Though popular, the McRib barbecue sandwich can't solve all of the chain's problems. So in recent months, McDonald's has introduced Chicken McWraps in a bid to stimulate sagging sales. But franchisees recently complained that the sandwiches took too long to prepare.

And the company is also confronting the fact that customer-service issues are rampant at its franchises: According to one report, McDonald's officials told franchisees that "service is broken." QSR Magazine, an industry trade publication, found that the average wait time at the McDonald's drive-through window was a full minute slower than at rival Wendy's (WEN).

McDonald's stock dropped by more than 2 percentage points to $99.76 a share in pre-market trading.

Matt Brownell is the consumer and retail reporter for DailyFinance. You can reach him at Matt.Brownell@teamaol.com, and follow him on Twitter at @Brownellorama.


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