McDonald's is barely holding on

Comparable sales rose only 0.1% worldwide in the fourth quarter, and January doesn't look good, either.

By Kim Peterson Jan 23, 2013 1:13PM
A sign outside the fast-food chain McDonaldMcDonald's (MCD) barely squeaked by in the fourth quarter, reporting Wednesday that sales at stores open at least a year only rose 0.1% globally.

And the company had to work very hard just to accomplish that tiny gain. It shifted the McRib launch into December from October to give holiday sales some oomph. It pressured stores to stay open on Christmas Day. It revived its Dollar Menu to eke out even more sales.

All of that work translated into just a 0.3% sales gain at U.S. restaurants open for at least a year. The rest of the world showed a loss. In Europe, the company's largest market, same-store sales were down 0.6%. In Asia, the Middle East and Africa, sales fell 1.7%.

And global operating margins fell, restaurant analyst Howard Penney told the Associated Press. When sales are up but margins are down, he said, that means "you're giving away food."

It will get worse before it gets better. Same-store sales in January will be negative, CEO Don Thompson said in a statement discussing the earnings. The company is feeling pressure on profit and sales in the near term, he said.

The big question for McDonald's in 2013 is whether it can meet long-term targets that now look extremely ambitious. The company wants overall sales growth of 3% to 5% and operating income growth of 6% to 7%. "We believe these targets remain realistic and sustainable for a company of our size and maturity," Johnson said.

OK, but a lot of things need to suddenly start going right for McDonald's to meet those numbers. The company is planning to open about 1,500 new restaurants this year and continue the ongoing overhaul and redecorating of existing locations.

Investors aren't so sure. The stock barely budged Wednesday after the earnings were released, and at midday was up less than 1% to $93.41. Shares have fallen 6.6% in the last year, but have been on a climb since November.

Investors don't want to give up on McDonald's. But after another quarter or two like this one, they may be a little more open to the idea.

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Tags: EarningsEconomyFoodRestaurants
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64Comments
Someone (graybeard2)
Jan 23, 2013 5:48PM
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A prime example of managing quarter to quarter instead of the long term.  You are always going to have ups and downs.   As one poster pointed out you don't see many McDonalds closing.   There are 2 within a mile of my workplace and each is doing gang busters at lunchtime.  They just rebuilt one of them from the ground up.  Hardly an act for a company that is barely making it.
pentacle
Jan 23, 2013 5:46PM
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Great headline...'falling arches'...lol! Love a sense of humor! Doth the author suggest the mega chain is a bit geriatric? Methinks so as well. How many decades his this leviatnan been around? How many go to comsume pink slime? Not I. Perchance it's time to put this beast to rest.
Chuck Blu Collar
Jan 23, 2013 5:39PM
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There are many" too large to fail "companys out there that treat there employees like crap, I know , I am a contractor for the largest cereal company in the world and there are many working as contractors or temps. When did companys stop caring about employees? after all they are consumers also. I really dont want to buy products from companys who treat people badlyno matter how American they are. Never shopped at Wa....t for the same reason. Im not wealthy but would wrather spend extra $ at a good company. Like ChicFiLet!Costco... who treat employees with dignity!
Enough of Them Already
Jan 23, 2013 5:29PM
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I wondered how they would survive when they took the playgrounds out of the McDonalds.  My grandkids now want to go to Burger King.

Who
Jan 23, 2013 5:15PM
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The upper management is too GREEDY.  They think if they don't get millions of dollars every month, they are losing money.  The upper management should be required to work at least 2 years in a restaurant and at the wages of the employees behind the counter.
American Car owner260
Jan 23, 2013 5:13PM
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Waiting in line for a half-cooked burger and cold fries is one reason they're not getting my business. Catering to welfare frauds is another. Lately, most of the McDonald's commercials on TV have targeted the huge contingent of slack-jawed, welfare cheats that are too lazy to go out and earn a living. Being able to buy McDonald's burgers with an EBT card is a slap in the face of every hard working American.
Michael Coats (trust2112)
Jan 23, 2013 5:10PM
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Maybe you should make your dollar menu burgers the size of Krystals/ White Castles? Maybe McD's can buy that extra horse meat from Europe? Or maybe you can treat your employees better, and the public will treat you better?
jlyent
Jan 23, 2013 5:03PM
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Who cares, if they did better this year than last?
WILD WILLY
Jan 23, 2013 5:02PM
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Who in there right mind would eat at a nasty place like Mickey D's anyways???


REGAL MAN500
Jan 23, 2013 4:59PM
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MONTANA 10 :I have no idea why you and other right wingers think people from the left are in love

with the USSR.The far right loves to believe in conspiracies.I guess there`s a commi under every

rock.Do you remember in 2008 when every right winger said Obama will turn this country over

to Russa on day one?As usual the far right was wrong.

Captain Peachfuzz
Jan 23, 2013 4:58PM
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Good ~ their food is top shelf KRAP!
Fax2
Jan 23, 2013 4:47PM
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I think one of the reasons Mcdonalds sales or services are down, because the employees does not have any customer service manners, including the managers, they barely greet customers, they put your change and receipt on the counter instead of handing it to customer. Mcdonalds needs to revamp their employees, they can be rude and obnoxious, lot of them does not have patient, they always look like you disturb them from doing something important, they don't smile. It is horrible. also they need to some puting customer cream and sugar in the coffee when you order it, Please, Please send your employees to some kind of customer service work shop.  Thanks
woe is us in usa
Jan 23, 2013 4:38PM
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Hello Mcd ---it is baloney that you can not get a burger at your restaurants before a certain hour of the day cause you are pushing your so called "breakfasts" .......do you take out all the hamburger patties , move them off site and the 16 yr old chefs not know how to steam cook one up before 10;30 {or 11 am on wk ends } ????

for a company known for burgers , you aren't too consumer friendly ...and your "breakfasts" are not that good .{being kind here, by the way ...}

same for burger king and hardies....

horay for steak and shake ......they will continue to get my early am $ ......don't care if I have to wait a few minutes, but when I want a burger , I want a burger .....am I alone in this?  bet not .

sadieandsamantha
Jan 23, 2013 4:22PM
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They are hurting so badly that they are planning to open fifteen hundred (yes, that's 1,500) new restaurants this year; are they kidding? Assuming that most of these are franchises, the numbers are staggering, especially in a poor economy. 
TestedNo-name
Jan 23, 2013 4:12PM
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They jacked prices up , and shrunk the food down in size,  who can afford to eat there any longer?
time2share
Jan 23, 2013 4:10PM
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The shrinking Fish for sure..! What's next... Flat fries with - 3D fry Glasses? or Scratch and sniff food item for the dollar menu...? Next... let's lock the bathroom up so only paying clients can use them or better yet let's charge for that too...!
time2share
Jan 23, 2013 4:04PM
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They have reached the top of the Price Rip off scale for fast food.....Notice all the Ice blown air and artificial flavors items on the menu exactly 26 of them from smoothie to soda drink.....those are the highest profit items.....Burgers are now just an incidental item....THEY WANT YOU TO DRINK UP ALL THAT SUGAR...and GET FAT....!!!  A SOFT KILL ...HARDEN YOUR ARTERIES AWAY...!!! FRANCHISEES ARE NOW GETTING SUCKERED BIG TIME AND SO ARE EMPLOYEES WITH NO BENEFITS...ALL ON CALL AS NEEDED PART-TIMERS.......A REAL .MODEL OF TODAY'S ECONOMY........WHY WORK WHEN YOUR BILLS ARE ALL GREATER THAN YOUR INCOME ...IT IS NO WONDER EVERYONE'S KILLING THEM SELVES...THANKS OBUMBER.........!!!!
tonrap
Jan 23, 2013 4:03PM
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Howard Penney the Associated Press. When sales are up but margins are down, he said, that means "you're giving away food."

Really?!!!  I only go to Mcdonalds during shamrock shakes...$$$$$ on regular menu items, Big macs as well as the filet shrunk in size as well in quality.  Giving it away.... highly doubtful.
Tye Down
Jan 23, 2013 3:59PM
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Burger King gets my 'quick burger' business.... followed by Chick-Fil-A for chicken and 5 Guys for 'gourmet' dining. McDonalds is not on my radar for anything but a restroom break as there is one at every exit on the interstate. 
rizzo51
Jan 23, 2013 3:48PM
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All these analysts and talking heads are idiots.  McDonalds is one of the companies that will feel the pinch from a bad global economy -- people who drive around in Rolls Royces don't eat at McDonalds!!!  Not to mention the fact that the most populous area in the US (i.e., the Northeast) was hit badly in the 4th quarter -- Superstorm Sandy kept millions of people out of restaurants of all kinds.  Dontcha think that would affect the profits of a chain like McDonalds?  I'm convinced that the best thing that could happen for the markets and the economy would be for everyone to stop listening to all these so-called "experts."
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