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.

More from Benzinga
62Comments
Dec 20, 2012 3:36PM
avatar

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 .

 

 

Dec 20, 2012 3:34PM
avatar
What's wrong with McDonald's other than the gross and disgusting food?
Dec 20, 2012 3:48PM
avatar

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.

Dec 20, 2012 4:27PM
avatar

21st Century Business Credo:

 

Screw the employee.

Screw the customer.

Profits Over Quality.

Pay As Little Taxes As Possible.

 

Return On Investment is No. 1. 

Dec 20, 2012 3:28PM
avatar
I think they call it the Peter Principle.  Everyone reaches their level of incompetency.  McDonalds is no different.  They have indifferent employees food is mundane. Dining areas are only barely cleaned, but let the local Health Dept worry about that!
Dec 20, 2012 3:23PM
avatar
I'm not in any big hurry to visit McDonalds again. Service was slow, I felt that I really upset the counter girls when I asked for an extra ketchup packet, food was tepid, cleanliness I would say was below average, but that's between them and the Health Dept.
Dec 20, 2012 4:41PM
avatar
Maybe they should make a burger that tastes like hamburger!
Dec 20, 2012 4:46PM
avatar
People are learning what junk food does to their bodies.  The American diet is the worse diet in the world.  People in third world countries have healthier arteries than Americans!
Dec 20, 2012 4:28PM
avatar
I always find it amazing how, when I ever go through the McDonald drive-thru that about 85% they miss something in my order. I mean really? how hard is it?? I mean that's not even about training, it's common sense!
Dec 20, 2012 4:32PM
avatar
There are simply too many average selections on the "menu". When McD's can't make a Big Mac properly as they seem to lately, they need to pair down the menu and get back to basics. HOT sandwiches and good customer service. Not hard, folks!
Dec 20, 2012 5:21PM
avatar

"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 4:42PM
avatar

You can bet that way more than half of the orders placed at McD's if filled incorrectly.  I was lured back in recently by a very tastey looking sandwich, the CBO, which stand for Cheddar Bacon Onion.  First.... it looked nothing, and I do mean nothing like the adds.  This pathetic sandwich was over priced and there was nothing on it.  They even forgot the bacon.  How does that happen.  As to being open on Christmas.  Consider me done.

Dec 20, 2012 4:28PM
avatar
I'll tell ya what happened. McDs decided to cheat their customers when it came time to cut back. Instead of cutting bonuses for fat exec's or cutting some of them altogether, they screwed with the dollar menu and raised prices. So, I knew then that I would never set foot in another McDs again and it seems others have also been similarly affected. YOU REAP WHAT YOU SOW!! And contrary to our worthless governments claims...you are NEVER too big to fail. You deserve to go out of business.
Dec 20, 2012 4:54PM
avatar

everyone runs to the movie theatres on thanksgiving and christmas day !!!! so why the big deal ?? if u truly have a beef then dont even go to the movies specially since the theatres treat the employees worse than any retailer on any holiday !!!!

Dec 20, 2012 5:04PM
avatar
I haven't eaten at McDonalds for years,....ever since I got a burger that gave me the worst heartburn of my life!  What was in that meat?  McDonalds, like many previously successful businesses strayed from the formula that made them successful in the first place. The old school managers built the business on strict rules for product and service that now apparently they have  let slip for sheer profit.  Like Wal Mart,   who also moved away from Sam Walton's business credo of selling goods at a fair price and made in the USA as much as possible.  Sam  offered  fair treatment of the employees as compared to other retailers with stock options and promoting from within..  Now both hire part time workers as cheaply as they can and dumped any extra benefits that would encourage the employees to work hard for the company.  Rotten from the top down. 
Dec 20, 2012 4:43PM
avatar
food is bland and horrible now...The fries have no taste and are rubbery. no matter what milkshake you order it taste "fake" and is contaminated with the strawberry flavoring.Thats the best part of the McBarf experience. The service is the slowest and most incompetent in the industry. Asking for Ketchup gets you disgusted looks. They recently remodeled all the McBarfs in our area. HIDEOUS is the word now. They look like something the military would erect with the olive drab and white colors.
Dec 20, 2012 4:47PM
avatar
do they really need to spend all that money on AMBIANCE? Clean fresh bathrooms and dining area would help a lot. Now they all look the same and boring. At least they all used to look different. Stop hiring all those MBA's and start hiring common sense people. Your food would seem better. Sitting in an upscale dining room eating a .99 cent burger--RIDONKULIS!!!!!
Dec 20, 2012 5:54PM
avatar
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.  
Dec 20, 2012 5:08PM
avatar

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.

Report
Please help us to maintain a healthy and vibrant community by reporting any illegal or inappropriate behavior. If you believe a message violates theCode of Conductplease use this form to notify the moderators. They will investigate your report and take appropriate action. If necessary, they report all illegal activity to the proper authorities.
Categories
100 character limit
Are you sure you want to delete this comment?

DATA PROVIDERS

Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.

STOCK SCOUTER

StockScouter rates stocks from 1 to 10, with 10 being the best, using a system of advanced mathematics to determine a stock's expected risk and return. Ratings are displayed on a bell curve, meaning there will be fewer ratings of 1 and 10 and far more of 4 through 7.

116
116 rated 1
265
265 rated 2
429
429 rated 3
612
612 rated 4
499
499 rated 5
525
525 rated 6
701
701 rated 7
533
533 rated 8
337
337 rated 9
131
131 rated 10
12345678910

Top Picks

SYMBOLNAMERATING
UPLULTRA PETROLEUM Corp10
COPCONOCOPHILLIPS9
TAT&T Inc9
DVNDEVON ENERGY CORPORATION9
EOGEOG RESOURCES Inc9
More

VIDEO ON MSN MONEY

ABOUT

Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.

Contributors include professional investors and journalists affiliated with MSN Money.

Follow us on Twitter @topstocksmsn.