McDonald’s Corporation (MCD) Sales Down 0.3%, Yet Beat Expectations

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McDonald’s Corporation (NYSE:MCD)’s worldwide monthly sales declined 0.3% last month, according to company updates. Despite the decline, McDonald’s still managed to beat expectations. However, the general picture is that the restaurant chain is still battling sales decline.

The 0.3% decline in global sales in May was lower than the expected decline of 0.9% for the month. In the previous month, global sales dropped 0.6%, but were still better than the expectation.

Sales by region

McDonald’s Corporation (NYSE:MCD) said comparable U.S. sales declined 2.2% last month. The lag in the U.S. was offset by impressive gains in Europe, especially in the U.K., Germany and France, leading to a 2.3% rise in European sales in the month of May.

However, the company continues to face challenges in China and Japan, because of last year’s food safety scandal. As a result, sales in the Asia Pacific, Middle East and Africa region fell 3.2% last month.

To improve the business situation in Asia, McDonald’s is keen to strengthen quality and value perceptions in the region, and that ranks among its top priorities in the Asian markets.

Proposed reforms

Some of the reforms the company is pushing include the introduction of new menu items and eliminating chicken raised with antibiotics. McDonald’s hopes that promoting menu changes and healthy foods will help draw in more customers as it battles for customer attention with the likes of Panera and Chipotle.

In other measures, McDonald’s Corporation (NYSE:MCD) intends to reorganize its structure so that it groups its markets based on shared characteristics rather than geographies. Additionally, the company revealed plans to increase franchised restaurants to 90% of its store count from the current 81%. The increase in franchised stores is expected to be achieved by the end of 2018.

Ending monthly reports

McDonald’s Corporation (NYSE:MCD) intends to end monthly sales reporting starting next month. The halting of monthly sales updates is expected to eliminate pressure and allow the company to focus on longer term growth initiatives, according to new CEO, Steve Easterbrook.

McDonald’s Corporation (NYSE:MCD) has been battling flagging sales in recent times and some paradigm shifts are needed to right the ship.

Neha Gupta

Neha Gupta has been in the financial space for over six years now. Gupta earned her MBA degree from Symbiosis Centre of Distance Learning in 2009 and her passion for finance led her to pursue Chartered Financial Analyst (CFA) course. She has successfully completed Level II of her CFA. She is a veteran in article writing, which is depicted in her numerous pieces published on SeekingAlpha, Nextiphonenews, InsiderMonkey, MarketWatch, and Techinsider. Her crisp and eloquent writing finds its best place in Researchcows, where emphasis is given on developing rich content for various websites, products, business plans, trainings, and book writing.

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