McDonald's Menu, Value Pricing Not Helping Sales

McDonald's french friesComparable-store sales at McDonald's Corp. (NYSE: MCD) fell 0.6% year-over-year in April, with sales down in two of the company's three geographic regions. Only U.S. sales grew, up by a slim 0.7%. Sales fell 2.4% in Europe and 2.9% in the Asia Pacific Middle East Africa (APMEA) region.

Like competitor Yum! Brands Inc.'s (NYSE: YUM) KFC stores, sales in China were hit by the onset of a new strain of bird flu and results were softer in both Japan and Australia. In Europe, sales declines in Germany and France more than offset gains in Russia and the United Kingdom.

The company's CEO said:

As we begin the second quarter against the backdrop of a persistently challenging macro environment, the McDonald's System is aligned around executing our long-term strategies to drive sustained, profitable growth.

It might be time for McDonald's and CEO Don Thompson to rethink the company's long-term strategies, which comprise enhancing store menus and creating a better customer experience. Every fast-food chain now has a low-priced value menu and simply extending McDonald's value menu to include a flavor-of-the-month may help in the short run, but it is not a long-term strategy.

It is the same with creating a better experience for customers, which means remodeling and updating the company's stores. No doubt that helps sales, but how long the effect lasts is arguable.

Shares of McDonald's are down about 0.3% in premarket trading this morning, at $102.00 in a 52-week range of $83.31 to $103.70.


Filed under: 24/7 Wall St. Wire, Food, Retail, Services Tagged: featured, MCD, YUM

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