Joblessness Hits McDonald’s November Sales in US

The recession has bitten deeper into consumers, and so the jobless rate and consumer confidence here in the US finally caught up with McDonald's Corp. in November; it seems high unemployment ate into sales.

Still doing better than rivals
The world's largest burger chain is doing better than its competitors, Most of them now aggressively pushing value menus and discounts of their own. The U.S. economy needs to pick up before McDonald’s can expect big improvements. Job growth will be the key to McDonald’s sales increasing.

On Tuesday, McDonald's said sales at restaurants open at least a year fell 0.6 percent in the U.S. This was the second consecutive monthly decline for same store sales, an important indicator of a restaurant chain's vitality. In October the same store sales fell 0.1 percent. November's overseas results were better the weakening dollar translated foreign revenue into more dollars. Outside the US, sales in locations open at least a year rose 0.7 percent.

Early Value Strategy adopter
Because of its size and the early adoption of a “Value” strategy with its increasingly popular dollar menu, McDonald's was an early beneficiary of the recession as families and diners in general traded down from more expensive restaurants. At McDonald’s last November, sales in locations open a year climbed 4.5percent in the U.S. and 7.7 globally. The recession’s length is making hard to maintain that momentum Todays reported results were only the fourth U.S. sales decrease in 6 1/2 years.

Increasing competition from rivals trumpeting their own deeply discounted menus as they adjust to the new consumer mood is also affecting McDonald’s. Taco Bell has a value menu that begins with items for 79 cents, and Wendy's is advertising $2.99 combos. Burger King has also heavily pushed a $1 double cheeseburger, against resistance from it’s own franchisees, that it claims as being a bigger and better value than McDonald's $1 McDouble burger.

Overseas Sales Stronger
In Europe, sales in locations open at least a year rose 2.5 percent, thanks to stronger business in the U.K. and France. But the figures were still short of what had been forecast. In other parts of the world, sales in locations open for at least a year in the Middle East, Africa and Asia/Pacific dropped 1 percent. Last year, the figure for these areas rose 13.2 percent.
Meanwhile, McDonald’s system wide sales — a figured based on results at company owned restaurants as well as those operated by franchise owners — climbed 10.1 percent. Adjusting for foreign currency fluctuations, system wide sales were up 2.3 percent. McDonald’s, based in Oak Brook, Ill., runs more than 32,000 restaurants in more than 100 countries.