McDonald’s finds soft growth in second quarter - VF Franchise Consulting
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McDonald’s finds soft growth in second quarter

Jul 31, 2018

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McDonald’s Corporation has announced results for its second quarter, seeing consolidated revenues decrease by 12 per cent, pinned on the impact of the company’s strategic refranchising initiative.

Little mention was made of McDonald’s Asian performance for the quarter, other than an acknowledgement of undefined “continued challenges” in South Korea.

The fast-food giant found system wide sales increased by 5 per cent, while global comparable sales increased by 4 per cent, reflecting positive comparable sales in all segments.

“We’re seeing good performance across our business as our customers tell us that they value and appreciate the moves we’re making to elevate the McDonald’s experience,” said McDonald’s president and CEO Steve Easterbrook.

“We’ve now marked 12 consecutive quarters of positive comparable sales, and we are confident that we’re executing the right strategy to achieve long-term, profitable growth.”

Comparable sales for the International Lead segment segment increased 4.9 per cent for the quarter, while operating income increased 15 per cent, primarily driven by progress in the UK and France, while comparable sales in the US increased 2.6 per cent.

Neil Saunders, managing director of GlobalData Retail, notes that although revenue growth has softened over the past year this quarters results represent a positive outcome for the restaurant company; suggesting growth in the US and beyond.

“Part of McDonald’s success comes from the fact it is attracting a wider mix of customers into its restaurants,” said Saunders.

“This is, in large part, a consequence of the modernization program the company has been undertaking. With around 1,000 restaurants refurbished each quarter, there has been a positive step change in customer perception, especially among older consumer segments.

According to Saunders, these changes have been cemented by initiatives to improve quality, such as the use of fresh rather than frozen beef; leading McDonald’s to become a destination more diners are prepared to visit and linger in.

“McDonald’s will come up against some tough prior year comparatives,” notes Saunders, “[which] means growth continues to soften. However, so long as menu innovation continues, we believe the chain will continue to be a winner in the fast food space.”

Not all is well at the restaurant chain, however, with a pair of McDonald’s workers taking it upon themselves to restrain, and attack, a customer who attempted to fill a water cup with soda, and then provoked the employees when they turned off the machine to prevent it.

A video of the altercation was posted to social media, with many fearing for the employee’s jobs after the way they reacted to the customer’s provocations.

The company has yet to release a statement regarding the incident.

Inside Retail Asia

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