McDonald’s (MCD, Financial) continues its bad run at the market. The company recently reported a dip in sales worldwide by as much as 2.2%. Sales at McDonald's outlets in the United States fell 4.6% in November –Â more than double the expected decline. This has been the trend in the company’s sales for the last six months.
The comparable sales at McDonald's have not risen since October 2013, as minor rivals had worn down its market share. Part of this can be owed to the fact that the consumers have started preferring Chipotle Mexican Grill (CMG, Financial), because of the healthy and diverse offerings provided at its outlets which allow diners to personalize their dishes. The Mexican food chain outlined a 20% increase in the comparable sales for the three months to September 30 –Â the third quarter of double-digit increases.
The output for McDonald's in the Asia/Pacific, Middle East and Africa markets declined by 4%, blown by a China meat supplier scandal that appalled customers and compelled the company to find new begetters for its chicken and beef.
In Europe, the market sales fell by 2% in November, as a vigorous UK performance was demoralized by a feeble Russian market and adverse results in both the European countries France and Germany. In August, the Russian government pressurized several outlets of the company in Moscow to close over citing the dubious hygiene rifts.
Growing demands from the consumers
The chief executive of McDonald’s, Don Thompson, said that the operator of a chain of restaurants is improvising on its menu and also improving and enhancing its marketing strategies. "Today's consumers increasingly demand more choice, convenience and value in their dining-out experience," he reported.
The analysts have also been anticipating a fall in sales at certain outlets by as much as 1.9% in the U.S. and 1.7% globally. Another reason that they have cited as a possible reason for the fall is the unyielding nature of the U.S. dollar.
Other reasons
Last week, on Thursday, thousands of fast-food wage earners drilled in nearly 200 cities all over the U.S. to entail for a sharp increase in the minimum wage and labor union rights. The pay protests seem to be another major reason for declining sales. Here’s what an 18-year-old worker at one of the company’s outlets at Knoxville had to say: “I make $7.25, and we're out here telling people that we can't get by on that.”
The labor unions wanted a minimum wage rise to $15 per hour from $7.25 from where it has been frozen since 2009. Fast-food chains together with McDonald's say that most of their outlets are possessed by sovereign operators who are accountable for the pay scales.
The stale meat issue
McDonald’s, Yum! Brands (YUM, Financial), and three other fast food chains under fire for allegedly using expired meat have published previously confidential lists of their suppliers in China.
Yum! Brands, the owner of Pizza Hut and KFC, the largest fast-food chain in China by number of restaurants, went on to release a list of 26 suppliers. These included subsidiaries of WH Group, the world’s largest pork producer, which listed in Hong Kong last week. Suppliers to McDonald’s include the dairy producers Beijing Sanyuan Foods Co. and Kowloon Dairy.
The company has been hit by the coming together of all these adversities and that at a wrong time. Well, everyone has a bad day and as they say there’s light on the other side of the dark tunnel. With the holiday season coming up next weekend, things might start easing up for the company.
