Dallas, Texas 05/09/2014 (FINANCIALSTRENDS) – McDonald’s Corporation (NYSE:MCD)’s delivered one more disappointing quarter of its Q1 financial 2014, post the weak-performance last year. The company reported a 1 percent drop in its consolidated operating-income despite the marginal increase of 0.5% in its global comparable-sales and the 1% growth in its consolidated revenues. The diluted EPS also dropped by 4% down to $1.21. The comparable sales or the same-store sales, is a very important measure of gauging the performance of a restaurant as it only includes the restaurants that are operating for over a year & excludes the effect of any currency fluctuation.
The confusion
The company’s comparable sales dropped by 1.7% in the United States, owing to the negative guest-counts attributed to the severe winter weather. McDonald’s tried to optimize the menu & modernize customer experience, but its efforts have not at all shown any positive results. Introducing many new items has led to confusion and part customers are not sure about what is on offer. This has led to a drop in same-store sales. In 2014, the company is focusing on the core menu offerings, that include the Big Mac, and Egg McMuffins, as well as Fries etc. and these contribute 40% to its total sales.
The competitors
In addition to this, with its competitors like Starbucks, Taco Bell & Burger King now introducing many breakfast items & offers, its dominance in the breakfast-segment is very much under threat. Since coffee is a very important breakfast item and Starbucks can leverage its brand-strength in this beverage to attract the morning customers. This kind of competition in its breakfast segment, that has been it strongest significant-contributor to the company’s revenue, is not good news for McDonald’s Corporation (NYSE:MCD)’s sales. The comparable-sales in Europe increases by 1.4% and was driven by the increase in traffic in the U.K., France & Russia which was offset by the negative same-store-sales in Germany.
