McDonald's disappointed with third quarter results
New report reflects lower revenues, operating income and earnings per share.
"McDonald's third quarter results reflect a significant decline versus a year ago, with our business and financial performance pressured by a variety of factors - from a higher effective tax rate, to unusual events in the operating environments in APMEA and Europe, to under-performance in the U.S., our largest geographic segment," said McDonald's President and Chief Executive Officer Don Thompson. "While our ability to withstand these factors is a testament to the Company's enduring brand and strong financial foundation, by all measures our performance fell short of our expectations."
Adding, "We recognize that we must demonstrate to our customers and the entire McDonald's System that we understand the problems we face and are taking decisive action to fundamentally change the way we approach our business."
Among the third quarter results included:
- Global comparable sales decrease of 3.3%, reflecting negative guest traffic in all major segments and the impact of the previously-disclosed supplier issue in certain markets in APMEA
- Consolidated revenues decrease of 5% (4% in constant currencies), partly due to the impact of the supplier issue
- Consolidated operating income decrease of 14% (14% in constant currencies), approximately half due to the impact of the supplier issue, and the remainder largely due to soft operating performance in the U.S. and certain markets in Europe
However, the company has undertaken a new global approach designed to increase its relevance with customers and drive guest traffic. The chain will be focusing on three specific areas, according to the announcement made.
- McDonald's Experience of the Future - a comprehensive restaurant execution concept that elevates the menu and customer experience elements that are hallmarks of the McDonald's brand, and capitalizes on investments in reimaging, service and technology enhancements to improve the look, feel and convenience of the McDonald's experience in ways that are in-tune with today's consumer needs,
- Digital Strategy - a global strategy built around simplifying the customer journey across ordering, payment and mobile offers - beginning with the implementation of exciting and relevant new options, such as Apple Pay,
- Resourcing for Growth - a diligent review of the organization's structure and use of resources in order to redirect spending toward those initiatives, such as the digital strategy and the McDonald's Experience of the Future, that will support the Company's key long-term growth initiatives.
