McDonald's outlines changes as sales slump
After posting yet another disappointing quarter at McDonald's, chief executive Don Thompson says the company hasn't kept up with the times and changes are in store for its US restaurants.
Thompson says that starting in January McDonald's will "simplify" its menu to make room for restaurants to offer options that are best-suited for their regions. To offer greater customisation, it also will expand its "Create Your Taste" offering that allows people to pick the buns and toppings they want on burgers by tapping a touchscreen. The program currently is offered in Southern California.
"We haven't been changing at the same rate as our customers' eating-out expectations," Thompson conceded during a conference call outlining the changes.
The remarks came after McDonald's said sales at established locations fell 3.3 per cent globally and in its flagship US market in the third quarter, marking the fourth straight quarter of declines for the world's biggest hamburger chain. Profit sank 30 per cent.
The changes come as McDonald's continues to struggle with myriad problems. One of its biggest challenges in the US is long-held perceptions around the freshness and quality of its ingredients. The chain has been fighting to boost sales as people gravitate toward foods they feel are more wholesome.
Some analysts question whether McDonald's planned changes will fix its problems. Sara Senatore, a Bernstein restaurant analyst, notes that its efforts seem focused on marketing around its food, rather than changing recipes.
McDonald's, meanwhile, has launched a social media campaign inviting customers to ask questions about its food. It began with frank questions like, "Why doesn't your food rot?" and "Is the McRib made from real pork?," showing just how bad some of the perceptions about McDonald's food can be.
In China, an undercover TV report recently showed one of its major suppliers repackaging expired meat. The plant stopped operations and many of McDonald's restaurants in the country were left unable to sell burgers, chicken nuggets and other items. The chain's reputation took a hit.
In the division encompassing Asia, sales at established stores sank 9.9 per cent.
McDonald's, which has more than 35,000 locations around the world, says it expects its challenges will continue into the current quarter, with global sales down for October as well.
For the quarter, revenue declined to $US6.99 billion ($A7.56 billion), short of the $US7.23 billion Wall Street expected. Net income declined to $US1.07 billion, or $US1.09 per share. Adjusted for one-time costs, earnings were $US1.52 per share. Analysts expected $US1.37 per share.