McDonald's US sales drop for first time in six quarters

McDonald's fourth-quarter revenue fell nearly 5% to $6.03 billion

McDonald’s sales at established US restaurants fell for the first time in six quarters as the novelty of all-day breakfast failed to overcome competition from supermarkets and other retailers.
 
Shares of McDonald’s fell as much as two per cent after the operator of the world’s largest fast-food chain reported fourth-quarter results on Monday. The stock later rebounded somewhat to trade down 0.9 per cent at $121.18.
 
McDonald’s and other restaurant operators are battling broad-based competition for consumer food dollars. Their rivals include convenience stores, supermarkets and meal kit delivery services such as Blue Apron.
 

The challenge from grocers has been particularly daunting. Supermarkets have been passing lower food costs on to shoppers, while restaurants are raising prices to offset the impact of minimum wage increases.

 
“Entering 2017, McDonald’s US will continue to focus on growing guest traffic,” the company said in a statement.
 
Traffic has fallen more than 10 per cent over the last four years at restaurants in the United States, McDonald’s most profitable market, according to a client note from RBC Capital Markets analyst David Palmer.
 
Sales at McDonald’s restaurants open at least 13 months fell 1.3 per cent in the fourth quarter, squeaking by analysts’ estimates of a 1.4 per cent drop compiled by research firm Consensus Metric.
 
Results from international markets also beat analysts’ expectations due to strength at restaurants in the UK, China, Japan and certain markets in Latin America.

 
US restaurants debuted all-day breakfast in October 2015 as part of Chief Executive Officer Steve Easterbrook’s plan to reverse lagging sales.
 
Sales did benefit, which made year-earlier comparisons in the latest quarter difficult, McDonald’s said in a statement on Monday.
 
“These changes were supposed to drive a steady and sustainable uplift in (consumer) spending rather than a one-off spike in sales, but it is increasingly clear that this strategy is not delivering,” Neil Saunders, head of retail analyst firm Consuming, said in an email.
 
McDonald’s fourth-quarter revenue fell nearly 5 percent to $6.03 billion, mainly due to the sale of restaurants to franchisees as part of Easterbrook’s turnaround plan.