McDonald's posts Q2 profit

by Meat&Poultry Staff
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OAK BROOK, Ill. – McDonald's Corp. reported a dip in operating profit and sluggish same-store sales for the second quarter, a reflection of the company's struggle to be a relevant brand among consumers.

For the quarter ended June 30, 2014, the company reported net income of $1.39 billion, or $1.40 per share, compared to $1.4 billion, or $1.38 per share. Revenues climbed to $7.12 billion compared to $7.01 billion in the year-ago quarter.

McDonald's plans to place renewed focus on value options and breakfast offerings.

Comparable US sales for the quarter declined 1.5 percent on sluggish customer traffic. The company intends to focus on service, marketing and value, core menu items and breakfast daypart initiatives in order to strengthen the customer experience.

"The McDonald's System is committed to creating the best experience for our customers by offering great-tasting food and beverages and a memorable and contemporary experience," said Don Thompson, McDonald's president and CEO. "During the quarter, we evolved our strategic Plan to Win framework to enhance our focus on the customer through insights, planning and actions. To reignite momentum over the next 18 months, we're focused on fortifying the foundational elements of our business by concentrating our efforts on compelling value, marketing and operations excellence to become a more relevant and trusted brand."

Global comparable sales were flat reflecting higher guest checks but lower traffic in all major segments. Comparable sales in Europe eased 1 percent, and operating income for the quarter was flat, McDonald's reported. The United Kingdom and France posted strong performances, while continued weakness dogged Germany's performance, according to the company.

McDonald's is going back to basics to re-ignite consumer interest in the brand.

"Emphasis on compelling premium menu offers, renewed focus on core menu and value options, and the roll-out of blended ice beverages in several markets supported the quarter's performance," McDonald's noted.
Asia/Pacific, Middle East and Africa (APMEA) showed a comparable sales gain of 1.1 percent in the second quarter on strong performance in China and other markets. Continued weakness in Japan continued to drag on the APMEA segment's operating income which declined 2 percent.

"Overall, 2014 is a year of strengthening the foundational elements of our business that are critical to enabling and advancing our longer-term strategies," Thompson said. "Heading into 2014, we acknowledged that we did not expect any material changes to the operating environment this year. As such, full year 2014 global comparable sales are expected to be relatively similar to year-to-date June performance, with July global comparable sales expected to be negative.

“While near-term results are expected to remain muted, sizable growth opportunities remain, and we are committed to pursuing these opportunities through continuous improvement in everything we do - from the food we serve, to our engagement with our customers, to the management of our financial resources," he added.

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