Positive UK sales were one of the few bright spots in a bleak third quarter update from McDonalds.
The fast food giant reported a 3.3% lfl sales slump for the third quarter ending 30 September 2014 and admitted decisive action was needed to “fundamentally change the way we approach our business”.
The company has warned that the next quarter is also likely to bring little cheer, admitting it has suffered from “negative guest traffic in all major segments”.
Revenues fell 5% to $6.98bn (£4.3bn) during the quarter while consolidated operating income dropped 14% to $2.07bn (£1.28bn). Net income dropped 30% to $1.07bn (£660m).
In Europe lfl sales were down 1.4% with operating income down 2%, however the UK “delivered positive comparable sales and operating income performance”.
McDonalds president and CEO, Don Thompson, said the decline was the result of a variety of factors, including a higher tax rate, “unusual events” across various global markets and under-performance in the US.
He said: “While our ability to withstand these factors is a testament to the company’s enduring brand and strong financial foundation, by all measures our performance fell short of our expectations.
“We recognize that we must demonstrate to our customers and the entire McDonald’s System that we understand the problems we face and are taking decisive action to fundamentally change the way we approach our business.”
Thompson said the company would focus on implementing a new global approach focussed on three specific areas - a new digital strategy; a review of the company’s structure and resources to “redirect spending toward initiatives…. that will support the company’s long-term growth initiatives; and an overhaul of the ‘McDonald’s experience’.
McDonalds said its new US president, Mike Andres, was over-seeing a revamped marketing approach highlighting food quality a “flatter, more nimble organisation” and a simplified menu.
