What's wrong with McDonald's?

After a stellar 2011, America's favorite fast food chain has struggled throughout 2012. What will 2013 bring?

By Benzinga Dec 20, 2012 11:55AM
A sign outside the fast food chain McDonaldBy Sam Mattera

Following a great 2011, McDonald's (MCD) has been one of the Dow's worst performers of 2012. Year-to-date, shares of McDonald's are down more than 9.7%.

The shares are off their recent lows, but remain well below the 52-week high of $102.22. A number of factors seem to be weighing on the fast food giant.

Most recently, on Wednesday, McDonald's was forced to respond to a report by China Central that chicken it sold in its Chinese stores may have been fed indiscriminate amounts of antibiotics and growth hormone.

On Monday, Reuters reported that McDonald's leadership was urging its franchisees to keep their stores open on Christmas Day. This is a break from the company's traditional policy of closing on major holidays.

In a company memo Reuters obtained, management noted that McDonald's stores that remained open on Christmas averaged sales of $5,500. Given that most restaurants are closed for the holiday, impressive Christmas sales seem intuitive given the lack of competition.

Is it a sign of desperation, or just a part of a greater business trend? Wal-Mart (WMT) drew the ire of some employees in November when it moved up the time it would open to 8 p.m. Thanksgiving night.

Analysts at Bank of America don't think openings could add much to the company's top lines, noting, "We do not view incremental openings on Thanksgiving this year as a primary factor behind a surprisingly good 2.5% U.S. same store sales increase for the month of November. Likewise, we are not anticipating that more Christmas restaurant openings this year will have much impact on December results."

The biggest issue with McDonald's is likely the company's exposure to Europe, which is significant. As Europe has struggled, McDonald's performance in the region has been weak. Yet, should the European economy begin to recover next year, that could create a tailwind helping to support shares of McDonald's in 2013.

Shares of McDonald's traded about flat on Thursday, at $89.72.

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62Comments
Dec 21, 2012 1:44AM
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I just wish the management here in Australia would get out and look at the stores.  The last meal we had at a Maccas put me off for life.  Staff and food were setting new standards of how low they could get!!

Dec 20, 2012 11:53PM
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how about a fresh cook juicy burger instead of a microwaved pos and take a hint the new oil you use might be better for us but it tastes bland.nobody goes to mcdonalds for healthfood
Dec 20, 2012 11:08PM
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It kills me to hear how people say bad thingts about McDonald's;  but,  you can find these same people in the drive-thru lane with 15 cars ahead of them.  It's like alot of people admit they don't like Barry Manilow; but, their ipad is loaded with his songs.

 

Come out of the closet people...

Dec 20, 2012 11:05PM
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mcdonalds problem is the price its cheaper to eat real food
Dec 20, 2012 6:03PM
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They don't pay their employees yet their a-hole CEO just bought a Trump Tower Chicago condo for $11M.  This country companies better start PAYING their EMPLOYEES and screwing their hot shot arrogant CEO's. As for MCD's food?  Dog food I'm sure tastes better. 
Dec 20, 2012 5:55PM
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Everybody is so America/Europe centric.  Asia is rising and Mc'Donald's is there.  Ray Krock the founder of MickeyD's said,  "I don't know what people will be eating in the years ahead.  All I can tell you is Mc'Donald's will sell the most of it."
Dec 20, 2012 5:54PM
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Not sure where the "Nay Sayers" go to their Mikki D's but my local stores are wonderful!  I do wonder where they find people with such great enthusiasm and drive to work for them at such a low salary.  I'm sure there is a large turn over but the product that I receive is as advertised.  
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It seems like every other week when I go in they have raised their prices yet again.  So I quit going.  It is very simple that when others are supplying my food for a lot less it makes sense to go where I can get it the cheapest.  The way they fix the food for a hundred and by the time I get mine it isn't as fresh as it could be.
Dec 20, 2012 5:36PM
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My McDonalds is GREAT!!   I  love the food and the employees are very friendly....The employees work very hard and take pride in there store!!
Dec 20, 2012 5:34PM
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Eating at McDonald's is always a gamble. Sometime their burgers and fries are right on, and other times they're stale and/or poorly cooked. Now that my odds of reasonably good food seem to have fallen below 1 out of 2, I don't feel like "gambling" anymore.

Dec 20, 2012 5:29PM
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Portion control is ruthless and rigid.  Customer service is indifferent at best.  There is no 99 cent menu and the selection is smaller and higher priced.  The restrooms and eating areas are all poorly maintained and there is little pride on external appearance at most stores.  Many stores are charging for extra sauce or catsup and you'd better not need an extra napkin.  All of these may appear penny-wise at corporate, but they are killing the relationship the store has with customers-families in particular.  They may still win the 20something singe customer but they have KILLED the relationship families had with Ronald McDonald. 
Dec 20, 2012 5:28PM
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It's like every other food or resturant.  You can't keep doing the same thing over and over and expect different results.

There product has become expensive and stale.  Hard combination to sell.

Dec 20, 2012 5:27PM
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porque no permiten que los clientes le den a estos pobres empleados propina? o es que piensan que el sueldo minimo es un dineral?
Dec 20, 2012 5:22PM
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Tyea! people are getting tired of sitting in that drivethru line so long, then being told to pull up & park it. Suppose to be "fast food" !
Dec 20, 2012 5:21PM
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"Most recently, on Wednesday, McDonald's was forced to respond to a report by China Central that chicken it sold in its Chinese stores may have been fed indiscriminate amounts of antibiotics and growth hormone."

 

Let me get this straight--the Chinese are complaining about possibly tainted products? The same people who brought us contaminated drywall, pet food with melatonin and toys full of lead? REALLY..!

 

Gotta love the irony.

Dec 20, 2012 5:18PM
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Mcdonalds is a great american corporation.Not only has it been profitable. It's food is very affordable which is very helpful to those who are in a pinch due to the economy. Give some credit folks. If you are so rich and snotty and you think the food is unacceptable go elsewhere. Lots of people who are down on their luck are able to get a meal on a few dollars. Personally I like the food.
        I appreciate McDonalds!

Dec 20, 2012 5:15PM
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Their hamburgers are the size of a cookie, is that a JOKE or what.
Dec 20, 2012 5:11PM
Dec 20, 2012 5:10PM
Dec 20, 2012 5:08PM
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If McDonald's would stop with the  "can I interest you in 2 apple pies" and just stick with "can I help you," maybe they would remember what you actually did order.

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