McDonald’s Not Loving Latest Earnings Report

Disappointing decline in global sales has caused company to rethink operations.

October 22, 2014

OAK BROOK, Ill. – Earlier this week, McDonald’s Corp. reported a 30% drop in quarterly profit, the worst monthly decline in more than a decade. The decline, which was not entirely unexpected, is being driven by problems in nearly every major part of the McDonald’s global empire, and the company is now vowing to make fundamental changes to its business, according to a report in the Wall Street Journal.

In Asia, the QSR chain is experiencing sales declines in China, partly due to scandal at one of its meat suppliers; in Europe, broader economic softness was compounded by political complications in Russia; and in its crucial U.S. home market, the chain has struggled to keep younger customers and strengthen its menu offerings.

Overall, McDonald’s reported a profit of $1.07 billion, or $1.09 a share, for the third quarter, compared with $1.52 billion, or $1.52 a share, a year earlier. The latest result included tax-related charges of 26 cents a share, which McDonald’s said related primarily to an unfavorable court judgment in a foreign jurisdiction that it didn’t name.

The company is launching several initiatives to improve its operations, including investments in service and technology enhancements to improve customers’ experience and a global push to make it easier for customers to order and pay for McDonald’s food digitally. McDonald’s has been struggling with weakness in its U.S. business for more than a year, as a complicated menu slowed service and younger customers left in favor of fast casual chains. In response, the chain has focused on improving staffing at busy times and emphasizing its breakfast and coffee offerings, among other measures.

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