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Almost a year after taking over at McDonald's Corp, Chief Executive Don Thompson is still looking for the right recipe to expand restaurant sales, which are being pinched by the weak global economy and stronger competition from revived rivals. The world's biggest fast-food chain on Friday dashed hopes that its restaurant sales would accelerate this spring, warning that global sales at established restaurants would be slightly lower in April.
The forecast sent McDonald's shares down 1.4 percent to $100.46 in midday trading. A week ago, the shares hit a record high above $103 on expectations that results would improve in the second half of 2013, when the chain would no longer be up against year-earlier US results that were bolstered by unseasonably warm winter weather. When Thompson took the top job at McDonald's in July, the chain had been on a long winning streak and had a big lead over rivals.
That faltered when global economic weakness and intensified pressure from formerly weak but more nimble chains such as Burger King World-wide Inc, Wendy's Co and Yum Brands Inc's Taco Bell caused its global-same restaurant sales to weaken. McDonald's results were expected to improve in April because the company would only have to top 3.3 percent growth in global restaurant sales in April 2012. By comparison, sales were up a whopping 7.7 percent in March 2012. Thompson also had increased low-cost offerings world-wide and has plans for new menu items in the United States, where it recently rolled out new wrap sandwiches.
In addition, McDonald's reported a first-quarter profit that fell short of Wall Street expectations as global comparable sales fell 1 percent - slightly less than the 1.1 percent decline forecast by analysts polled by Consensus Metrix. Net income inched up 0.3 percent to $1.27 billion, or $1.26 per share. Analysts, on average, were looking for $1.27 per share, according to Thomson Reuters I/B/E/S. First-quarter revenue rose 0.9 percent to nearly $6.61 billion, higher than the $6.59 billion estimated by analysts.

Copyright Reuters, 2013

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