By Jason Galanis
McDonald’s had a disappointing second quarter, with sales and profits sinking. The underperformance has highlighted, for some, the fast food giants’ growing problems with enamoring customers to their brand of burgers and fries, especially within the USA. In response to the trends, the company is shifting its business strategy to focus more upon more disciplined business practices and better reactions to market and customer trends.
McDonald’s CEO, Steve Easterbrook, announced that he was certain that the third quarter would turn better results worldwide, with a rebound in sales happening globally regardless of the bounce it would get from recovering from last year’s supplier scandal in the restaurant’s Asian branch. The company’s sales fell 10 per cent to $6.5bn and was followed by net income falling 13 per cent to just $1.2bn. Despite the rapidity of the fall, the drops fell in line with estimates made by analysts, with the stock trading down 0,4 per cent at $96.72 in New York.
The tumble brings attention to McDonald’s biggest problem, which is the changing taste of the home market in the US. For the first time in the 60 years that the restaurant has been operating, they are seeing net closures across the US. The company cited the US and Japanese markets as the cause for 80 per cent of the decline. In response to this, the company is testing out new menus with all-day breakfasts and streamlined options in the US, but it will face competition from Taco Bell which has been championing an all-day breakfast for some time. The recent influx of other fast food chains such as Mexico’s Chipotle and American Shake Shack has also had a profound effect upon McDonald’s performance in the US market, as they have chipped away at the millennial demographic.