McDonald’s sales drop in April as Asia demand declines

Bloomberg NewsMay 8, 2013 

— McDonald’s, the world’s biggest restaurant chain, said Wednesday that sales at stores open at least 13 months fell 0.6 percent last month as growth slowed in its Asia-Pacific region.

Analysts estimated a 0.5 percent drop, the average of 11 estimates from Consensus Metrix. Sales at stores in the company’s Asia-Pacific, Middle East and Africa unit fell 2.9 percent, the Oak Brook, Ill.-based company said in a statement. Analysts had projected a 1.4 percent decline.

Restaurant chains have been facing increasing consumer scrutiny in China after an outbreak of bird flu and the investigation of a former poultry supplier to Yum Brands for selling chicken with excessive levels of antibiotics. McDonald’s has sought to compete with Yum’s KFC and Pizza Hut chains in China by adding stores and new menu items.

In Asia, April’s sales decline was due to the avian flu in China and “softer results” in Japan and Australia, McDonald’s said in the statement.

McDonald’s fell 1.3 percent to $100.95 at the close in New York. The shares have advanced 14 percent this year through Wednesday, matching the gain for the Standard & Poor’s 500 Restaurants Index.

McDonald’s faces a “persistently challenging macro environment” as it begins the second quarter, Chief Executive Officer Don Thompson said in the statement.

Sales increased 0.7 percent in the United States and fell 2.4 percent in Europe. Analysts had projected drops of about 0.1 percent and 1 percent, respectively, according to Consensus Metrix, a researcher owned by Kaul Advisory Group in Wayne, N.J.

McDonald’s surprise gain in the United States, a turnaround from the prior month, was fueled by the introduction of chicken McWraps, value items and breakfast items, the company said in the statement. March comparable-store sales declined 1.2 percent at McDonald’s domestic restaurants.

The chain, with about 14,100 U.S. locations, has been rolling out new menu items, including the McWraps and also egg-white sandwiches to lure customers away from competitors. This year, Burger King Worldwide introduced veggie and turkey burgers, while Wendy’s is selling grilled-chicken flatbread sandwiches.

McDonald’s April sales were hurt by sensitivity around the chicken industry in China. Yum, which has more than 5,400 restaurants in China, said its first-quarter same-store sales tumbled 20 percent after a former poultry supplier was investigated for selling chicken with too many antibiotics. More recently, China is facing a deadly outbreak of avian flu, which is also negatively affecting KFC sales.

Same-store sales at McDonald’s locations in Japan dropped 3.7 percent in April, the 13th straight monthly decline. Comparable, or same-store, sales are an indicator of a company’s growth because they include only older restaurants.

McDonald’s has about 34,500 restaurants worldwide, of which 81 percent are franchised.

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