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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Jan 23, 2013 3:08PM
25 billion in profit last year and you call it BARELY HOLDING ON? What planet are you from??
Jan 23, 2013 1:56PM

What a stupid article.Have you heard of McDonald`s closing restaurants?I`ve only

heard of one and that was due to a mass shooting.

Jan 23, 2013 2:39PM
Let's see...within 10 miles of my house, there is one brand new restaurant going up and another restaurant which was updated by totally demolishing the current building and then building the latest edition/plan as if it was a totally new location. My understanding that the franchisee has 15 restaurants.  I have known several franchisees through the years and each one of them became multi-millionaires.
Jan 23, 2013 3:48PM
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."
Jan 23, 2013 3:59PM
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. 
Jan 23, 2013 3:42PM
McDonalds is hurting themselve because of inconsistant quality and food cooked in a factory somewhere then microwaved. You can get this kind of quality at the convenience store/gas station.
Jan 23, 2013 3:32PM

I haven't eaten a McD's burger in years...the taste was awful. Have on occaision eaten their chicken selects which are OK when you're in a hurry. The burgers in my opinion have gone downhill for a long time...ever since they started nuking them.

Jan 23, 2013 4:03PM
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.
Jan 23, 2013 4:22PM
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. 
Jan 23, 2013 4:10PM
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...!
Jan 23, 2013 4:47PM
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
Jan 23, 2013 5:13PM
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.
Jan 23, 2013 5:15PM
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.
Jan 23, 2013 5:03PM
Who cares, if they did better this year than last?
Jan 23, 2013 6:05PM

The world is changing is so is our taste for food.  Haven't eaten at McD for decades BUT I worked for them when I was a teenager (1977 - 1978) and they took quality, customer service and the company very seriously.  One blogger noted the bad service and at today's prices if you are laying out $$$ to take your family for burgers and fries it better not be a bad experience!


They need to revamp their menu and COOK their food.  Perhaps they need to read the comments and see what people are saying.


I appreciate Burger Kings veggie burger!  I get one once in a blue moon but it's still a treat nonetheless.

Jan 23, 2013 4:58PM
Good ~ their food is top shelf KRAP!
Jan 23, 2013 5:53PM
I believe they need to improve on customer service.
Jan 23, 2013 5:29PM

I wondered how they would survive when they took the playgrounds out of the McDonalds.  My grandkids now want to go to Burger King.

Jan 23, 2013 6:12PM

i wouldn't feed that inhumanely raised garbage meat  to my dog!

Jan 23, 2013 7:16PM
Their prices are going to high for what you receive.
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