McDonald’s global sales fall 0.1% in Q4 2013

McDonald’s says its overall global sales dropped 0.1% during the fourth quarter of 2013, but it still plans to open 1,600 new restaurants this year.

The largest fast-food chain in the world, with 34,000 outlets, described 2013 as “a challenging year.”

Q4 2013 was the company’s fifth successive disappointing quarter. Overall global sales for the whole of 2013 increased 0.2% compared to 2012.

The much eagerly-anticipated McRib sandwich appears to have failed to turn McDonald’s sales around.

McDonald’s declined in most regions

McDonald’s US sales declined by 1.6%, and fell by 2.6% in the fast-growing emerging economies of Africa, the Middle East and Asia. In Europe, however, sales rose by 1%.

As customer preferences move towards healthier lifestyles, which include well-balanced, nutritional meals, McDonald’s has struggled to position itself.

Although the company today offers a much broader range of foods, including salads and smoothies, its competitors, such as Burger King and Wendy’s have also moved into the healthier food markets.

McDonald’s President and Chief Executive Officer, Don Thompson, said:

“Around the world, consumers want a satisfying meal at an affordable price from a brand they trust. At McDonald’s, delivering a consistent customer-focused restaurant experience continues to be our top priority.”

“While 2013 was a challenging year, we begin 2014 with a renewed focus on the global growth priorities that are most impactful to our customers. We are uniting consumer insights with innovation and consistent execution to optimize our menu, modernize the customer experience and broaden accessibility to Brand McDonald’s.”

The focus will be on menu choice

In a drive to improve sales in the US, McDonald’s says it will concentrate on menu choice. However, many people believe that its widening menu is probably one of the reasons why it is struggling. Executives in the company admit that they have “over-complicated” the menu.

For its Asia-Pacific outlets, the company aims to focus on “locally-relevant menu items”. Apart from opening 1,600 new restaurants, McDonald’s says it will re-image another 1,000.

McDonald’s has started 2014 with a fairly flat January. Nevertheless, Thompson, full of optimism said “While near-term challenges remain, we are intent on strengthening our brand to further differentiate McDonald’s and become an even bigger part of our customers’ lives.”

Share price pressure on CEO

Don Thompson, who has been CEO for 18 months, is not only under pressure to improve menus and change management, the company’s stock has risen just 7% since July 2012, well below the Dow Jones Industrial Average Index’ 27% rise. McDonald’s is a component of that Index.

Below are some highlighted data issued by McDonald’s:

Full Year 2013 results:

  • Gobal comparable sales rose 0.2%.
  • Consolidated revenue grew 2% (two percent in constant currencies).
  • Consolidated operating income rose by 2% (three percent in constant currencies).
  • Diluted earnings per share were $5.55, an increase of 4% (four percent in constant currencies).
  • $4.9 billion is returned to shareholders through dividends and share repurchases.

Q4 2013 results:

  • Global comparable sales declined by 0.1%.
  • Consolidated revenues rose by 2% (two percent in constant currencies).
  • Consolidated operating income remained the same (one percent rise in constant currencies).
  • Diluted earnings per share of $1.40, an increase of 1% (two percent in constant currencies).
  • $1.3 billion returned to shareholders through dividends and share repurchases.