Americans aren’t eating as much McDonald’s

McDonalds

Are Americans losing their appetite for McDonald’s?

The fast-food giant reported that sales in the United States continue to decline. Its first-quarter earnings fell well short of analysts’ expectations.

McDonald’s blamed bad weather for its disappointing results, but it also said “challenging industry dynamics” are eating into profits.

Rival fast-food chains, including regional players like Sonic and Jack in the Box, are starting to steal some of the shine from McDonald’s Golden Arches.

The competition has been particularly fierce at breakfast time, when McDonald’s makes about 25% of its sales.

Taco Bell, which is owned by Yum! Brands, recently launched a Waffle Taco with great fanfare. McDonald’s responded by offering free coffee in March.

McDonald’s has been focusing on coffee in the past few years as Dunkin’ Donuts and Starbucks have ramped up their food offerings. They now have an extensive offering of iced coffees, for example.

“Breakfast was the piece of McDonald’s business that had held up the best, and it’s now facing potential threats” said Sara Senatore, an analyst at Sanford Bernstein & Co.

The Golden Arches has also been struggling to innovate as rival chains launch new products aimed at younger consumers, a key demographic for the fast-food industry. KFC, for example, recently brought back its Double Down bread free chicken sandwich, which has somewhat of a cult following.

“Its competitors have gotten better, but McDonald’s has stayed the same,” said Lynn Collier, an analyst at Sterne Agee.

Chief executive Don Thompson addressed concerns about McDonald’s declining market share in a conference call with analysts.

Thompson said the company is unveiling new marketing campaigns to reconnect with customers, but he acknowledged that the initiatives do not represent “a sliver bullet” and that it will take time to turn the sales trends around.

McDonald’s, he added, is “thoughtfully evolving our approach to remain relevant.”

Still, investors seemed to take the results in stride. McDonald’s shares were flat in early trading.

McDonald’s said it expects global sales to improve in April as the weather in the United States returns to normal.

“The outlook is trumping the fact that they missed earnings,” said Collier.

Investors were also encouraged by McDonald’s sales growth in Europe, which accounts for 35% of its overall revenue, notes Jack Russo, an analyst at Edward Jones. And McDonald’s reported “solid” sales growth in China.

But the company’s core market remains under pressure. McDonald’s said sales at U.S. stores open at least one year were down 1.7% in the first quarter.

Earnings in the quarter fell 4% to $1.21 per share. Analysts surveyed by Thomson Reuters had predicted $1.24 per share. Revenue increased 1% to $6.7 billion, which was in line with expectations.

McDonald’s had signaled that 2014 will be a tough year, with increased competition, rising commodity prices and higher costs related to store renovations.

The company has benefited recently as investors have rotated money out of more risky assets into stocks that are considered stable.

“Generally speaking, the market is willing to give McDonald’s a pass on what were not great results in the absolute,” said Senatore. “The market is looking for stability, so as long as things aren’t getting worse, that should be enough for a company like McDonald’s.”

14 comments

  • Chucky1992

    I quit going to McDonald’s because I’m trying to make healthier choices and because their food quality has dropped over the last few years.

  • ShawtyH

    McDonald’s food is way to expensive for what you get. When you order off the dollar menu and still pay more then you would at a sit down restaurant that there is a problem. Plus the food just does not taste as good anymore.

  • Thomas Christopher

    After reading this article, I made it a point to go to McDonald’s to get one of the HEALTHY choices on their menu (Grilled Chicken Wrap to be exact) and thumb my noise at the anti-capitalist, food Facist, anti-choice hypocrites on the Left that are attacking the great American institution.

    • Vasu Murti

      Does McDonald’s *really* have any healthy options?

      The Nutritional Data Continues to Mount.

      From The Pritikin Plan, The McDougall Plan, and the Pulitzer Prize nominated Diet for a New America in the 1980s to Vegan: The New Ethic of Eating in the 1990s, to Dr. T. Colin Campbell’s The China Study in 2005 to the recent DVDs Forks Over Knives and Vegucated, the growing body of evidence indicates that the optimum diet for humanity is a vegan diet:

      The following points and facts are excerpted from Please Don’t Eat the Animals (2007) by the mother-daughter writing team of Jennifer Horsman and Jaime Flowers:

      “Each year, the meat industrial complex abuses and butchers nearly nine billion cows, pigs, sheep, turkeys, chickens, and other innocent, feeling animals just for the enjoyment of consumers. Each year, nearly 1.5 million of these consumers are crippled and killed prematurely by heart failure, cancer, stroke, and other chronic diseases that have been linked conclusively with the consumption of these animals. Each year, millions of other animals are abused and sacrificed in a vain search for a ‘magic pill’ that would vanquish these largely self-inflicted diseases.”

      —Alex Hershaft, PhD, president, Farm Animal Reform Movement

      When analyzing 8,300 deaths in the United States, United Kingdom, and Germany among 76,000 men and women in five different, large studies, researchers concluded that vegetarians have a 24 percent reduction in death from heart disease.

      Similarly, in the famous Oxford Vegetarian Study, where 6,000 vegetarians were compared with 5,000 meat-eaters over nearly two decades, scientists found that the rate of death from heart disease was 28 percent lower in vegetarians than in meat-eaters.

      One study analyzed eighty scientific studies in leading medical journals. The analysis found that vegetarians had lower blood pressure, and were less likely to suffer from stroke, heart attack, and kidney failure.

      A large German study of nearly 2,000 vegetarians found that deaths from heart disease were reduced by over one-third, and that heart disease itself was far less than that of the general population.

      Another large study examined the coronary artery disease risk of young adults ages 18 to 30 and vegetarians were found to have much higher levels of cardiovascular fitness and a greatly reduced risk of heart disease.

      “The process of gradual blocking of the coronary arteries begins not in adulthood but in childhood…and the main cause of this arteriosclerosis is the steadily increasing amount of fat in the American diet, particularly saturated animal fats such as those found in meat, chicken, milk and cheeses. If there was another disease that caused half a million deaths a year, you can be sure that the public would be acutely aware of the danger, and that the cure or prevention would be universally practiced.”

      –Dr. Benjamin Spock, author, child expert

      “I don’t understand why asking people to eat a well-balanced vegetarian diet is considered drastic, while it is medically conservative to cut people open and put them on powerful cholesterol-lowering drugs for the rest of their lives.”

      –Dr. Dean Ornish, author, Reversing Heart Disease

      Stroke is the third leading cause of death behind heart disease and cancer. Vegetarians have a 20 to 30 percent reduced risk of having a stroke. Stroke, like heart disease, is associated with diets high in saturated fats, and the vegetarian diet is naturally low in these fats.

      The Oxford Vegetarian Study found cancer mortality to be 39 percent lower among vegetarians when compared with meat-eaters. The European Prospective Investigation of Cancer found vegetarians suffer 40 percent fewer cancers than the general population.

      Studies have shown that decreasing a woman’s animal fat intake can reduce the chances that she will die from breast cancer. A large-scale, long-term study in the Netherlands found a powerful connection between the amount of animal fat consumed and the rate of prostate cancer. A review of a dozen studies found dietary fat strongly correlated with prostate cancer.

      Ovarian, uterine, and endometrial cancers have all been shown to be strongly correlated to the amount of animal fat in one’s diet, and vegetarian women have significantly lower rates of these cancers.

      “The beef industry has contributed to more American deaths than all the wars of this century, all the natural disasters, and all automobile accidents combined.”

      –Dr. Neal Barnard, Executive Director, Physicians Committee for Responsible Medicine

      “Vegetarians have the best diet. They have the lowest rate of coronary disease of any group in the country. They have a fraction of our heart attack rate and they have only 40 percent of our cancer rate.”

      –William Castelli, MD, Director, Framingham Heart Study

      “Human beings are not natural carnivores. When we kill animals to eat them, they end up killing us because their flesh, which contains cholesterol and saturated fat, was never intended for human beings…”

      –Dr. William Roberts, editor-in-chief, American Journal of Cardiology

      Les Brown of the Overseas Development Council calculates that if Americans reduced their meat consumption by only ten percent per year, it would free at least twelve million tons of grain for human consumption — or *enough* to feed sixty million people.

  • Will Grant

    Another commercial disguised as “news.” I guess next week there will be some sort of “inside expose” on Hardees.

  • Crystal Street Merritt

    Frank hit the nail on the head. GMOs. I am as far from an “anti-capitalist, food Facist, anti-choice hypocrites on the Left that are attacking the great American institution” (Thomas Christopher) that a person can get. Thomas, some of the folks you are referring to do not want McDonald’s to go out business, they merely want the public educated on what is going in their bodies via the food they eat. Then the public can put pressure on McDonald’s to change their ingredients. That’s called free market.

  • Vasu Murti

    McDonald’s (which test-marketed a veggie burger in California over a decade ago) is merely giving the public what it thinks it wants.

    Several years ago, a series of e-mail exchanges between animal activist Lauren Ornelas (Viva!) and John Mackey, CEO of Whole Foods Market, prompted Mackey to go vegan. He later commented in Veg-News (a slick, trendy, vegan periodical out of San Francisco) that companies like Whole Foods can put vegan products on the market, but there needs to be an actual consumer demand for these products, if they are to succeed. That’s capitalism.

    (Mackey, a libertarian-leaning entrepreneur, later incurred the wrath of the American Left by expressing opposition to health care reform in the Wall Street Journal.)

    To change things at the corporate level, we have to change things at the grassroots level: i.e., consumer demand. We have to educate the public.

    In an opinion piece in the now-defunct Animals’ Agenda from the late 1990s, Ingrid Newkirk, Executive Director of People for the Ethical Treatment of Animals (PETA), pointed out that the meat and dairy alternatives, veggie burgers, soy “ice creams,” etc. found nowadays in leading supermarket chains didn’t magically appear on the marketplace. They came about through consumer demand.

    Additional data from Please Don’t Eat the Animals (2007) by Jennifer Horsman and Jaime Flowers:

    Meat production causes deforestation, which then contributes to global warming. Trees convert carbon dioxide into oxygen, and the destruction of forests around the globe to make room for grazing cattle furthers the greenhouse effect.

    The Food and Agricultural Organization of the United Nations reports that the annual rate of tropical deforestation has increased from nine million hectares in 1980 to 16.8 million hectares in 1990, and unfortunately, this destruction has accelerated since then.

    By 1994, a staggering 200 million hectares of rainforest had been destroyed in South America just for cattle.

    Livestock production affects a startling 70 to 85 percent of the land area of the United States, United Kingdom, and the European Union. That includes the public and private rangeland used for grazing, as well as the land used to produce the crops that feed the animals. By comparison, urbanization only affects 3 percent of the United States land area, slightly larger for the European Union and the United Kingdom. Meat production consumes the world’s land resources.

    Half of all fresh water worldwide is used for thirsty livestock. Producing eight ounces of beef requires an unimaginable 25,000 liters of water, or the water necessary for one pound of steak equals the water consumption of the average household for a year.

    The Worldwatch Institute estimates one pound of steak from a steer raised in a feedlot costs: five pounds of grain, a whopping 2,500 gallons of water, the energy equivalent of a gallon of gasoline, and about 34 pounds of topsoil.

    Thirty-three percent of our nation’s raw materials and fossil fuels go into livestock destined for slaughter. In a vegan economy, only two percent of our resources will go to the production of food.

    “It seems disingenuous for the intellectual elite of the first world to dwell on the subject of too many babies being born in the second- and third-world nations while virtually ignoring the overpopulation of cattle and the realities of a food chain that robs the poor of sustenance to feed the rich a steady diet of grain-fed meat.”

    —Jeremy Rifkin, pro-life AND pro-animal author, Beyond Beef: The Rise and Fall of the Cattle Culture, and president of the Greenhouse Crisis Foundation

    Les Brown of the Overseas Development Council calculates that if Americans reduced their meat consumption by only ten percent per year, it would free at least twelve million tons of grain for human consumption — or *enough* to feed sixty million people.

  • 1SHOT1KILL

    The reason McDonald’s sales are declining, is because they have been under a relentless attacks from the far left whackos for the last 3 decades. They attack McDonald’s because it is the top dog corperation in the fast food market. Have you ever seen or heard of any of these leftist whacko groups attacking Burger King, Hardee’s, or Taco Bell??? The animal rights whackos have attacked KFC in the past, but not so much on the “healthiness” of their menu, but rather the processing of the chickens.

    These leftist could care less about the “healthiness” of the menu at Mickey D’s or any other fast food chain. That is just the guise they use to attack the “corporations”. They want to destroy the “cooperation”. The greedy, corrupt, soul crushing, and inhumane corporation. That is their ultiamte goal, because McDonalds is seen as the epitome of capitalism, and that my friends the leftist just cannot let stand. They must destroy it and destroy all successful symbols of capitalism.

    You simply cannot be under relentless daily negative attacks for 3 decades from the leftist media and not see a decline in sales.

    • Vasu Murti

      In the mid-’90s, when the McDonald’s in Amsterdam began serving a veggie burger, Chrissie Hynde of the Pretenders, a long-time animal rights activist, was among its first patrons!

      Extending rights to black Americans did NOT diminish rights for white Americans. But if pro-lifers are worried that granting rights to animals will somehow lead to a devaluation of human life, how do they explain their support for *corporate* personhood?

      A pamphlet distributed by Milwaukee SOUL (Save Our Unwanted Lives) points out that under current U.S. law, corporations are considered legal persons, while humans in prenatal development are denied this moral status. (reprinted in Pro-Life Feminism: Different Voices, 1985)

      In 1989, Presbyterian minister and environmental activist Richard Cartwright Austin discussed proposals to amend the Constitution:

      “It is time to affirm that all creatures within the boundaries of our nation deserve constitutional recognition, and that rights extend beyond the human community…

      ”To secure their rights within our legal system they would, of course, require human agents willing to argue their case, just as agents now represent the perceived interests of infants, the comatose, and others who cannot speak on their own behalf.

      ”Corporations, which are legal constructions and not natural beings, have standing in court to protect their interests now…

      “A constitutional amendment to recognize the rights of a vast new constituency — all God’s creatures–will not succeed without broad popular support. Animals ask us for considerate treatment and the earth cries for loving care.”

      Austin’s words reflect the rising tide of environmental concern in America and the emergence of an animal liberation theology.

      • rembrandt

        Are you the pasty faced creep at the office luncheon that always asks for the vegetarian option and then raises a stink when there isn’t one.

  • JT

    All of you who think this is some kind of leftist conspiracy theory, please continue to eat at McVomit. Every meal. 5 or 6 times a day. Then we won’t have to hear your stupid conspiracy theory b.s. every day.

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