McDonald’s Ekes Out Higher Profit With Value Menu
McDonald’s Corp. eked out a higher profit in the fourth quarter with the help of its Dollar Menu and the McRib, but the world’s biggest hamburger chain also warned that a key sales figure is expected to drop this month.
The negative forecast reflects the intensifying competition and changing dining habits McDonald’s is facing. Traditional rivals such as Burger King, Taco Bell and Wendy’s have been revamping their menus and posing a bigger threat to the Golden Arches than they have in recent years.
In addition, people are increasingly heading to chains such as Chipotle and Panera that offer restaurant quality food for slightly higher prices.
To bolster slumping sales, McDonald’s made a series of moves in recent months such as returning its focus on its Dollar Menu, shifting the introduction of its McRib from October to December and pushing franchisees to stay open on Christmas. In November, the company ousted the president of its U.S. business after a key sales figure dropped for the first time in nearly a decade. CEO Don Thompson said Wednesday that the figure is expected to drop again in January, reflecting the near-term pressures the company is facing.
For the October to December period, McDonald’s said sales at restaurants open at least a year rose 0.1 percent globally. In the U.S., the figure rose 0.3 percent. But in Europe, McDonald’s biggest market, the figure fell 0.6 percent as guest counts declined. It fell 1.7 percent in the region encompassing Asia, the Middle East and Africa.