Global slowdown chips away at McDonald’s boom

The world's largest hamburger chain said this week its net income fell by 4% in the second quarter as the dollar strengthened against global currencies. Same-store sales – sales at restaurants open at least 13 months – have also begun to slow as austerity measures take their toll in Europe and China's economy slows.

The news was a rare slip for McDonald's, which has consistently beaten analysts' expectations in recent years, and a worrying sign of trouble in the global economy. The news contributed to a sell-off on the Dow Jones index.

McDonald's figures came as Coca-Cola Enterprises – Coke's United States-listed European bottling business – reported a similar hit from slowing demand and a strengthening dollar and other problems linked to the bad weather in Europe and a French tax on fizzy drinks.

Same-store sales at McDonald's rose by 3.7% globally in the second quarter. The figure is the key measure for restaurant chains and the rise beat most analysts' expectations. But it was a sharp slowdown from the 7.3% increase McDonald's reported in the first quarter of 2012 and the 5.6% growth the company reported for the same quarter last year.

Net income for the second quarter was $1.3-billion, down from $1.4-billion a year earlier.

Headwinds
"McDonald's global comparable sales remained solid for the quarter while the overall results reflected the slowing global economy, persistent economic headwinds and the investments we've made to enhance restaurant operations and provide customers with the everyday value they have come to expect from McDonald's," said Don Thompson, the company's newly appointed chief executive.

"As we begin the third quarter, global comparable sales for July are expected to be positive, but less than the second quarter," he said.

Sales in the US grew by 3.6% for the quarter and in Europe sales grew by 3.8% – held up by sales in the United Kingdom and Russia.

Sales in the once fast-growing Asia-Pacific, Middle East and Africa were almost flat at 0.9% for the quarter. Solid performances in Australia and China were offset by weakness in Japan.

The results came as Coca-Cola Enterprises reported that its net income fell by 17% in the second quarter and the company warned of more woes to come.

Marketplace challenges
John Brock, chairperson and chief executive, said the company faced a "unique combination of unfavourable weather and ongoing marketplace challenges".

He said bad weather in Europe had hit sales alongside slowing demand and a tax on sugary drinks in France.

Western Europe's main Coke bottler earned $205-million in the April to June quarter, compared with $246-million a year earlier.

Volume declined by 6%, driven down by falls in sodas and non-carbonated beverages such as juices and teas. Energy drinks' volume rose by 16% and Coke Zero, a soda without calories, rose by 2.5%.

Total volume fell less slowly in the UK, down by 4.5%, than in continental Europe (including Norway and Sweden) where it fell by 7%. – © Guardian News & Media 2012

Advertisting

Stranded commuters say Ramaphosa’s rail promises ring hollow

Cape Town’s largest passenger rail line has been closed for months, hitting people’s pockets and adding to road traffic congestion

EFF ‘circus’ becomes contagion as MPs heckle Malema

ANC MPs test the EFF’s disruptive tactics on the leader of the Red Berets in Sona reply

Ramaphosa ‘neutral’ in Mkhwebane, Parliament impeachment row

However, the president says even if he has a conflict of interest, another Cabinet member could suspend the public protector

Strike-off case pulls in judge

Judge Mushtak Parker is implicated in an application to strike off his former partners. He is also involved in the fight between the Western Cape high court’s judge president and his deputy
Advertising

Press Releases

Response to the report of the independent assessors

VUT welcomes the publishing of the report of the independent assessors to investigate concerns of poor governance, leadership, management, corruption and fraud at the university.

NWU student receives international award

Carol-Mari Schulz received the Bachelor of Health Sciences in Occupational Hygiene Top Achiever Award.

Academic programme resumes at all campuses

Lectures, practicals, seminars and tutorials will all resume today as per specific academic timetables.

Strategic social investments are a catalyst for social progress

Barloworld Mbewu enables beneficiaries to move away from dependence on grant funding

We all have a part to play to make South Africa work

Powering societal progress demands partnerships between all stakeholders

So you want to be a social entrepreneur?

Do the research first; it will save money and time later

Social entrepreneurship means business

Enterprises with a cause at their core might be exactly what our economy desperately needs

Looking inwards

Businesses are finding tangible ways to give back – but only because consumers demand it