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 Sam MatteraFollowing 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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I've contacted McDonald's corporate office about poor service, inacurate orders, several orders that had one food type look like it was picked up off of the floor and placed in the container, no maple syrup in a pancake order, and the list can go on.
Corporate thanked me for the feedback and assured me that they would forward my comments to the local, offending, McDonalds. Later they sent an email and asked if I was satisfied with the follow-up from the local store. I replied that I had not heard from the local manager, at all. That was the last communications from McDonalds corporate. They are definately in a downward spiral! They had a good run. Time for them to go away.
I Will not ever shop at ANY store that is open on a major holiday - New Years Day, Easter, Memorial Day, 4th of July, Labor Day, Veterens Day, Thanksgiving, & Christmas. These days are for families to get together and relax. Major employment establisnments are pushing holidays and family time to Extinction and the publis is letting it happen. Sorry folks but if you are open on a holiday - I AVOID your store like the plague, and avoid your store all year as well. It is getting harder and harder to find family run stores, but when I find them I shop there. I'm doing my part to buy AMERICAN .
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