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McDonald’s Sales Fall in Fourth Quarter

27 January 2014

GLOBAL - Fast food chain McDonald’s saw global comparable sales increase by just 0.2 per cent over the last financial year.

The small rise reflects a rise in prices and a drop in customers compared to the previous year.

The company reports a consolidated revenue increase of two per cent and consolidated operating income up also by two per cent.

Diluted earnings per share was $5.55, up by four per cent.

However, in the fourth quarter global comparable sales fell by 0.1 per cent, while consolidated revenues rose by two per cent and consolidated operating income was flat.

In the US, comparable sales fell by 1.4 per cent in the fourth quarter, while operating income rose by one per cent.

During the quarter, the company said the US evolved its value proposition with the introduction of Dollar Menu & More and featured new limited-time food and beverage options to increase the relevance of its product offerings.

Looking ahead, the company said the segment is intent on optimising current initiatives by strengthening its focus on menu choice, customer engagement and operations excellence to drive sales and profitability.

For the quarter, Europe generated comparable sales growth of one per cent and increased operating income of three per cent.

Strong performance in the UK, Russia and France was partially offset by Germany.

McDonald’s said that Europe continues to emphasize value menu enhancements in key markets, premium menu additions and limited-time offers, and expansion of the breakfast daypart.

APMEA's fourth quarter comparable sales fell by 2.4 per cent, and operating income declined by eight per cent, reflecting weakness in Japan and relatively flat performance in China and Australia.

To strengthen results in this key growth segment, APMEA is focused on accelerating growth across all dayparts with everyday affordability, locally-relevant menu items, expanded conveniences and new restaurant openings.

McDonald's President and Chief Executive Officer Don Thompson said: "The McDonald's System is pursuing the long-term opportunities that exist within the global marketplace by investing in the business to build upon the solid foundation that is already in place and drive future growth and value for our System and shareholders.

“For 2014, our capital expenditures are targeted at $2.9 - $3.0 billion, providing for 1,500 - 1,600 new restaurant openings and the reimaging of over 1,000 existing locations. Consistent with our long-standing priorities for our use of cash, after investing in our business, we are committed to returning all free cash flow to shareholders over the long term, through dividends and share repurchases. For 2014, we expect to return approximately $5 billion to shareholders through dividends and share repurchases."

Mr Thompson added: "As we begin 2014, global comparable sales for the month of January are expected to be relatively flat. While near-term challenges remain, we are intent on strengthening our brand to further differentiate McDonald's and become an even bigger part of our customers' lives. We have an outstanding brand, the best franchisees, suppliers and employees in the industry and distinct competitive advantages along with the right strategies to deliver sustained, profitable growth over the long term."

TheMeatSite News Desk

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