Daily Management Review

McDonald's Februrary sales spiral down


American hamburger chain McDonald's is struggling with its sales, thanks to a tectonic shift in consumer’s tastes as well as lifestyle choices, especially in its home country.

The fast food retailer has announced recently that its sales continued to dip in February despite bringing in a new chief executive in the form of Steve Easterbrook, the UK head of McDonald’s. The company said its store sales in stores new locations fell by 4 percent in the United States and by 1.7 percent globally.

The company further validates this slump with the shift in consumer choices. According to the statement, “Consumer needs and preferences have changed, and McDonald’s current performance reflects the urgent need to evolve with today’s consumers, reset strategic priorities and restore business momentum.”

While new locations showed underperformance the established locations also fell short of expectations. Same-store sales marked a downfall in the United States, which is still the company’s largest market. The company blamed it on ‘aggressive competitive activity’.

Even faced by these downfalls, the company has vowed to launch itself as a "modern, progressive burger company".With the February sales, McDonald’s has ended the run of former Chief Executive Don Thompson. His time in the helm of the company resulted in falling profit, revenue and traffic with 2014 being considered a one of the worst year in decades for the fast food chain.

While this is the case with the US, the company has found a slight rise in the same-store sales in Europe even as they were down more than 4 percent in the region encompassing Asia, the Middle East and Africa. Though Asia has always been a promising market for fast food operators, a food safety scandal involving meat suppliers in the region as well as shipment delays from the West Coast lulled the demand in the region.

Meanwhile, the rouses in the European market for the fast food chai has taken a completely new turn with recent accusations of tax evasions in the region. A report published by an anti-poverty agency and trade unions has noted that the company could have avoided as much as €1.2 billion by channeling the tax money to a Luxembourg subsidiary.

With nine straight falls over monthly analysis, the fast food chain is looking at how to convince irate investors. Meanwhile Australia proved to be a better region as far as sales was considered. The profits show a 25 per cent increase in profit to $234.4 million. Even then, with 80 percent of the restaurants getting franchised in the region, the profit does not reflect in the papers of the multi-billion dollar food giant.

The company has meanwhile attempted to get a good vote by announcing that it would not sell chicken treated with human antibiotics. McDonald’s is also one of the largest buyers of chicken in the US and it needs to be seen how much resistance is being put on the new move of the company by the producers of Chicken.  With all these steps in place, all eyes are on the new CEO of the company to shower a fresh lease of life on the Golden Arches.