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Mcdonald's follows Tesco in sales plummet


Mcdonald’s is yet another food-supplier giant to announce a large first-quarter sales decline. The food chain yesterday reported a $5.95bn revenue drop equalling to an overall 11% decline, compared to its like-for-like results from last year. Mcdonalds claims it experienced a decrease in footfall throughout stores, primarily from east Asian customers.

The fast-food giant’s net income has plummeted a third to $812m as it experienced a 30% profits decrease in the first three months of year. The business had anticipated poor results because of customers’ shift to healthier lifestyles and in March promoted executive Steve Easterbrook to CEO in an attempt to tackle the company’s growing issues.

Mcdonald‘s had gained a 3.1% share increase after Easterbrook’s post-promotion announcements revealing an initial turnaround strategy. The company aims to address consumers’ changing tastes, overcomplicated menus, use of antibiotics in its chickens, and controversial low-wages for their workers.

“We need to act now,” Easterbrook commented. “We intend to make meaningful impact with customers and how they perceive our brand and our food.” An in-full strategy will be unveiled on May 4, where the brand will be pushing sales through a marketing campaign promoting the paying for food with “lovin”.

The chain has recently started to close weaker performing stores, including 130 restaurants in Japan and 220 across parts of the U.S, China, and Africa, in an attempt to re-boost its deflating profits. Mcdonald‘s claim its sale are still reflecting to the impact of the  food scandals in eastern regions last year and that its sales in China are still bad but showing signs of improvement, while it faces “prolonged, broad-based consumer perception issues” in Japan.

“McDonald’s management team is keenly focused on acting more quickly to better address today’s consumer needs, expectations and the competitive marketplace,” said Easterbrook. “We are developing a turnaround plan to improve our performance and deliver enduring profitable growth.”

Additionally, the Big Mac retailer has announced its eco-driven plans to illuminate deforestation from its supply chains. The pledges follow those of Dunkin’ Donuts, Krispy Kreme, and Yum Brands for example. Mcdonald’s’ eight-point commitment outlines promises to stop deforestation in areas most crucial in reducing carbon in the atmosphere, known as high carbon value and high carbon stock forests.

Overall, worldwide same-store sales fell over 2% in the first-quarter, with Eastern Asia and African regions falling by 8.3%. Europe’s first quarter same-store sales declined 0.6%, where weakness in France and Russia failed to offset strength in the U.K.

By Natalie Whitmore

Published on Thursday 23 April by Editorial Assistant

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