McDonald’s says a key sales figure has fallen for the first time in nearly a decade, as it faces the double whammy of a challenging economy abroad and intensifying competition at home.
The world’s biggest hamburger chain says global revenue at restaurants open at least 13 months fell 1.8 per cent in October.
The last time it dropped was in March 2003. The figure is a key metric because it strips out the impact of newly opened and closed locations.
It’s a snapshot of money spent on food at both company-owned and franchised restaurants and does not reflect corporate revenue.
McDonald’s says the figure fell 2.2 per cent in both the US and Europe in October.
In the region encompassing Asia, the Middle East and Africa, it dropped 2.4 per cent. CEO, Don Thompson, cited the “pervasive challenges of today’s global marketplace” for the declines.
In Europe, where McDonald’s gets 40 per cent of its business, the company said it would offer new meal combinations at various price ranges amid ongoing economic uncertainty, and continue remodelling restaurants.
The company said positive results in the UK were offset by declines across many other regions. In Asia, the company said it plans to differentiate itself with menu offerings tailored to local tastes.
After years of outperforming its rivals, McDonald’s has been hitting some road bumps recently, with long-time rivals such as Burger King and Wendy’s reviving their brands with improved menus and new TV ad campaigns.
Taco Bell, owned by Yum Brands, is also enjoying growth with the help of new offerings such as it Doritos Locos Tacos and higher-end Cantina Bell bowls and burritos.
Additionally, Americans are increasingly flocking to restaurants such as Chipotle Mexican Grill and Panera Bread Co, which offer better-quality food for a little more money.
The broader fast-food landscape has been undergoing changes over the past several years too, with the rise of chains such as Subway and Starbucks.
On Thursday, McDonald’s said it would remain focused on underscoring its value message.