McDonald’s U.S. Sales Trail Estimates as Competitors Lure Diners

McDonald’s U.S. Sales Trail Estimates as Competitors Lure Diners

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McDonald’s Corp. (MCD:US)’s U.S. sales funk worsened in November as rivals lured away diners amid the choppy economic recovery.

Sales at U.S. stores open at least 13 months dropped 0.8 percent in November, Oak Brook, Illinois-based McDonald’s said in a statement today. Analysts projected a 0.3 percent gain, the average of 14 estimates from Consensus Metrix. Global same-store sales rose 0.5 percent. Analysts projected a 0.6 percent gain.

The world’s largest restaurant chain, which last year got 32 percent of revenue(MCD:US) from its U.S. locations, has been revamping its menu and trying to improve service to attract Americans amid fierce competition. Burger King Worldwide Inc. (BKW:US) recently introduced new items similar to McDonald’s fare, including barbecue rib sandwiches and Big King burgers. Taco Bell is selling breakfast foods and value packs of tacos.

VIDEO: McDonald’s Store Sales Down as Rivals Lure Diners

“Their competitors are just getting a little bit more focused and a little bit better about what they’re doing,” Peter Saleh, an analyst at Telsey Advisory Group in New York, said in an interview. Burger King and Wendy’s Co. are advertising new items and taking some customers from McDonald’s, he said.

McDonald’s monthly U.S. same-store sales haven’t gained more than 1 percent since July.

The shares fell 1.1 percent to $95.75 at 9:05 a.m. in New York. McDonald’s climbed 9.7 percent this year through Dec. 6, while the Standard & Poor’s 500 Restaurants Index gained 23 percent.

“Competitive activity and relatively flat industry traffic trends negatively impacted performance” in the U.S., the company said in the statement.

Value Items

Restaurant chains are competing (MCD:US) to sell value items to American diners. McDonald’s last month began selling new fare on its Dollar Menu & More including $2 bacon McDouble burgers and bacon-cheddar McChicken sandwiches. It also has tried to sell more expensive fare such as pumpkin lattes and chicken wings.

“Competition remains intense, and we are making adjustments,” Chief Executive Officer Don Thompson said during an investor meeting on Nov. 14. “Retailers are battling for greater portion of a smaller pie.”

Fast-food sales in the U.S. may increase 0.5 percent to $191 billion this year after a 0.8 percent gain in 2012, according to a July report from researcher IBISWorld Inc. McDonald’s has about a 19 percent share of the market, the data shows.

Europe Sales

Same-store sales rose 1.9 percent in Europe and fell 2.3 percent in the company’s Asia Pacific, Middle East and Africa region. Analysts estimated a 0.8 percent gain and a 0.7 percent drop, respectively, according to Consensus Metrix, a researcher owned by Kaul Advisory Group in Wayne, New Jersey.

In Europe, McDonald’s is opening more McCafe locations, as well as drive-thru stores, to attract customers amid a tough economic environment. In the U.K., the Big Mac seller has recently started selling new blended-ice drinks and breakfast foods, including a snack-sized wrap.

Comparable-store sales are considered an indicator of a company’s growth because they include only the older, established locations. McDonald’s has more than 34,900 restaurants globally, of which 19 percent are owned by the company.

McDonald’s plans to report fourth-quarter results on Jan. 23.