Fewer customers made trips to McDonald’s restaurants during the company’s fiscal first quarter, which ended March 31, 2014.
What’s more, after a decade of growth, annual sales at U.S. McDonald’s locations open at least one year (referred to as same-store or comparable sales) fell for the first time last year.
Growing competition in the fast-food segment could be a factor as well as Burger King has introduced $1 sandwiches and last fall brought back its “Big King” sandwich.
In late March, Taco Bell began selling breakfast items such as sausage burritos and Cinnabon bites.
McDonald’s, the world’s largest restaurant chain, reported that its net income fell 5.1%, to $1.2 billion, during the first quarter. While revenue inched up slightly by 1%, same-store sales slipped 2%.
McDonald’s executives remain focused on improving sales by adding more investments in restaurant capabilities, modernization and customer engagement, CEO Don Thompson said in a statement.
Last month McDonald’s said it was planning to expand a test this year that lets people order customized burgers. The chain first rolled out the pilot in November, and now it plans to extend the concept in as many as 100 locations in Southern California.
“At McDonald’s, we aspire to be our customers’ favorite place and way to eat and drink, and our actions are grounded in creating the best overall experience for our customers,” Thompson said. “In the near term, we are prioritizing our efforts around those elements of the restaurant experience that are most impactful−offering the best food and beverage options and delivering outstanding service. For the long term, we are focused on more effectively leveraging consumer insights to guide our global growth priorities of optimizing our menu, modernizing the customer experience and broadening accessibility to brand McDonald’s. We are intent on pursuing initiatives that will strengthen our relationship with our customers to reignite our business momentum.”
During the first quarter, Europe grew comparable sales 1.4%, and operating income by 6%. Positive sales performance in the U.K., France and Russia was partially offset by ongoing weakness in Germany. Across Europe, a combination of unique limited-time food events, premium offerings and everyday affordable pricing contributed to positive performance.
Looking forward, McDonald’s is focused on stabilizing key priority markets including the U.S., Germany, Australia and Japan.
“In today’s dynamic global marketplace, our goal is to ensure that we are evolving to remain a relevant and trusted brand by serving great-tasting, high-quality, affordable food and creating memorable experiences with our brand,” Thompson added. “By leveraging a deeper understanding of what our customers want with the power of our business model, our investments in restaurant capabilities and modernization, and our hard-earned competitive advantages, we will grow McDonald’s business and deliver enduring profitable growth over the long term.”