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McDonald's Profits Plunge 30 Percent

McDonald's Profits Plunge 30 Percent
Reuters
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Oct 21 (Reuters) - McDonald's Corp reported a 30 percent fall in quarterly profit due to a food scandal in China and tough competition in the United States, and the world's largest restaurant chain said these factors were expected to hurt current-quarter results.

The company's shares fell 2 percent in premarket trading after it also said it expected a fall in same-restaurant sales for October.

McDonald's U.S. and global comparable sales fell by a steeper-than-expected 3.3 percent in the third quarter.

The company has been struggling in the U.S. market, where the fast food it helped pioneer is falling out of favor, with customers choosing healthier options available at chains such as Chipotle Mexican Grill.

McDonald's business in Europe, its biggest market, was hurt by issues in Russia and Germany. Sales in China, its fastest-growing market, plunged due to a supplier scandal.

"McDonald's third-quarter results reflect a significant decline versus a year ago ... by all measures, our performance fell short of our expectations," Chief Executive Don Thompson said in a statement.

Same-restaurant sales at McDonald's Asia-Pacific, Middle East and Africa (APMEA) business tumbled 9.9 percent, while those in Europe fell 1.4 percent.

Analysts on average had expected same-restaurant sales to fall 3 percent globally, 2.9 percent in the United States, 10.6 percent in APMEA and 0.3 percent in Europe, according to research firm Consensus Metrix.

McDonald's net income fell to $1.07 billion, or $1.09 per share, in the quarter ended Sept. 30 from $1.52 billion, or $1.52 per share, a year earlier.

Total revenue fell 4.6 percent to $6.99 billion.

McDonald's shares closed at $91.59 on the New York Stock Exchange on Monday. Up to Monday's close, the stock had fallen 5.6 percent this year. (Reporting by Siddharth Cavale in Bangalore and Lisa Baertlein in Los Angeles; Editing by Kirti Pandey)

Correction: A headline on an earlier version of this story incorrectly said that McDonald's sales plunged 30 percent.

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Before You Go

McDonald's Most Spectacular Menu Flops
6) McLean Deluxe(01 of06)
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In 1991, McDonald’s tried to go the healthy route, crafting a buger dubbed the McLean Deluxe that would stand up to its critics, showing them the fast-food giant could offer low-fat options on a menu laden with trans fat and high-calorie products. The advertising campaign boasted a new kind of burger that was 91 percent fat-free with 10 grams of fat, compared to the Big Mac's 26 grams of fat. The burger actually contained seaweed that was meant to bind the meat together as a way of lowering the fat content. Needless to say, the burger was not a hit with customers and critics dubbed it the "McFlopper."Click here to see All of McDonald's Menu FlopsCredit: flickr/ jbcurio
5) McPizza(02 of06)
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In the 1980s, McDonald’s felt it was imperative to compete with other fast-food chains like Domino’s and Pizza Hut, and it decided to launch the McPizza as well as other items like a lasagna and a spaghetti dish. Although McDonald's executives believed this would help the menu become more attractive to those looking for traditional dinner items, the McPizza was actually quite unpopular with patrons looking for fast in-and-out service. Credit: flickr/ roadsidepictures
4) The Hula Burger(03 of06)
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The Hula Burger was the brainchild of owner Ray Kroc. He believed that this meatless burger, containing grilled pineapple with cheese on a bun, would be a perfect option for Catholics who abstain from eating meat during Lent. While the Filet-O-Fish, another Lent-inspired option, still remains popular to this day, the Hula Burger did not enjoy such long-term success. Credit: iStockphoto/ Thinkstock
3) McLobster(04 of06)
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One of the seasonal and local menu items that popped up on McDonald’s menus in eastern Canada and New England during select summer months was the infamous McLobster. The company produced this faux lobster roll in a hot dog bun during the summertime, when lobster prices were relatively cheap. But "cheap" (for lobster) didn’t match up with the McDonald’s clientele. The sandwich clocked in at $5.99, and customers veered away from the expensive special.Credit: flickr/ jonchia
2) McAfrika(05 of06)
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Over the years, McDonald’s has released international products in different locations across the world, some to great success. However, in 2002, McDonald’s released one of the worst menu items and marketing flops in the company’s history. The sandwich, the McAfrika (consisting of beef and vegetables in a pita), was released in Norway during some of the worst famines Southern Africa has ever seen. The campaign was believed to be created in such poor taste that McDonald’s took the item off its menus and agreed to continue to keep donation boxes for charities in support of the faminie in Africa.Credit: businessinsider.com
1) Arch Deluxe(06 of06)
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When crafting an ad campaign for its Arch Deluxe, McDonald’s spent more money on the advertising campaign than it had on any other singular item in its history. Coming in at over $150 million, the Arch Deluxe campaign flopped, making the sandwich a very expensive mistake. The campaign was seeking an upscale demographic, boasting the new sandwich with an "adult" taste and a mustard-mayonnaise sauce. When that didn’t work, new TV ads featured Ronald McDonald out partying and playing pool, a certain shift from the restaurant’s family-friendly image.Click here to see All of McDonald's Menu FlopsCredit: ign.com
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