McDonald’s monthly sales worst in 10 years

Food safety issue in China hit chain hard in July



McDonald’s Corp. served up a disappointing July, largely due to food-safety concerns in Asia, as well as widespread problems in the United States, the world’s largest restaurant company said Friday.

For the second time this week, McDonald’s said that this year’s sales forecast “is now at risk” to be reduced further.

Sales at longstanding McDonald’s restaurants around the globe fell 2.5 percent last month, the company said. Same-store sales, or sales at restaurants open at least 13 months, fell 3.2 percent in the United States and 7.3 percent in the Asia/Pacific, Middle East and Africa region, what the company calls APMEA.

Analysts had anticipated a 1.1 percent decline overall, with a 2.6 percent drop in the United States and a 0.5 percent decline in APMEA, according to Consensus Metrix.

July’s 2.5 percent decline in global comparable sales matched McDonald’s performance in June. Those are the worst comparable sales McDonald’s posted since March 2003, when its global comparable sales plunged 3.7 percent.

McDonald’s had already warned on Monday that its full-year sales forecast may have to come down because of a variety of factors that had worsened from when it reported quarterly results July 22. On Friday, the company again said its 2014 same-store sales forecast — which called for relatively flat same-store sales — “is now at risk.”

Janney analyst Mark Kalinowski said he now expects McDonald’s annual global comparable sales to decline by 0.3 percent. If such sales fall, 2014 would mark the company’s weakest annual sales performance since 2002, Kalinowski said.

In the United States, McDonald’s said it struggled in part because it had a big Monopoly event running in July 2013. At the same time, this year the chain was promoting premium beef and chicken options, which may have turned off some value-conscious diners. Currently, McDonald’s is promoting fare such as a $2 Jalapeno Double burger on its Dollar Menu & More board.

McDonald’s U.S. same-store sales have now fallen in eight of the past nine months.

On July 20, a Shanghai Husi Food plant in China was shut down after a Chinese TV report showed workers picking up meat from a factory floor, as well as mixing meat beyond its expiration date. The plant, owned by Illinois-based OSI Group, had been a supplier to some of McDonald’s restaurants in China and to other major chains there, including Yum Brands.

McDonald’s said its performance in China, Japan and certain other markets fell significantly after the food safety issue. The markets affected represent about 10 percent of the company’s global systemwide sales.