McDonald's Corp on Monday reported a steeper-than-expected drop in global sales at established restaurants in November, hurt by weakness in the United States and Asia, and warned that such results would "significantly pressure" margins in the current quarter.
November marked the sixth straight month of world-wide same-restaurant sales declines at McDonald's, which is battling changing consumer tastes, tough US competition, the after-effects of a supplier scandal in Asia and economic and political turmoil in Europe. World-wide sales at restaurants open at least 13 months were down 2.2 percent in November, more than the 1.7 percent decline expected by analysts polled by research firm Consensus Metrix.
Shares in McDonald's were down 3.5 percent to $92.97 in early trading on the New York Stock Exchange. Chief Executive Officer Don Thompson, who took the helm in July 2012, has shaken up management and is giving more power to local operators in a bid to improve results.
Despite that, US sales at restaurants open at least 13 months tumbled 4.6 percent in November. Analysts, on average, were expecting a decline of 1.9 percent. McDonald's US same-restaurant sales have not increased since October 2013, in part due to competition from smaller and more nimble direct rivals ranging from Wendy's Co and Burger King World-wide Inc to In-N-Out Burger and Chick-fil-A. The company is localising US menus and putting greater focus on customisation and fresh ingredients as it also seeks to better compete with popular chains like Chipotle Mexican Grill Inc and Subway, where diners pick the ingredients that go into their meals. The stronger US dollar also is expected to reduce fourth-quarter profit by as much as 9 cents per share, McDonald's said on Monday.
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