McDonald's to roll out breakfast dollar menu

McDonald's has announced will begin selling a variety of breakfast items for $1 early next month, a spokeswoman for the world's largest hamburger chain released the plan Thursday.

The move to add to its already popular dollar menu comes as McDonald's tries to fight a decline in U.S. sales, which have slipped following months of success when its cheap eats were a big draw for recession-strapped diners. November sales were down, and McDonald’s blamed the high jobless rate and the economy in general for the decline.

Dollar breakfast items added

Breakfast items to be added to the $1 menu, which already includes eight items for lunch and dinner time, are the company's Sausage McMuffin, a sausage burrito, a sausage biscuit, a small coffee and a hash brown. Some of the items are already sold for a dollar or less at some locations, although prices vary. Franchisees can set prices within limits, and McDonald’s will take that into account. For instance, a restaurant already selling a small coffee for 89 cents will substitute a larger beverage for its Dollar Menu.

Fast-food restaurant chains, which spent recent years expand their early morning business, have seen declining breakfast sales figures from business diners as unemployment climbs. It means fewer workers stop in for coffee and a breakfast sandwich on their way to the office. NPD Group’s market research has shown breakfast traffic fell 2 percent this summer at the nation's fast food restaurants.

At McDonald's, breakfast business is continuing to increase, although growth has slowed this year. McDonald’s has not publicly provided specific figures on its breakfast sales. Analysts feel that Thursday's move should McDonald's strengthen its breakfast business, in which it is still dominant among fast-food chains.

Fast food breakfast competition heats up

The dollar breakfast menu move will also put competitive pressure on McDonald's competitors, many of whom are also rushing to slash menu prices to keep customers, who are ever more reluctant to open their wallets, happy.

Dunkin Donuts is trying out a 99-cent breakfast menu in the Chicago area. Burger King's already has a nationwide breakfast value menu that includes hash browns, a ham omelet sandwich and a french toast stick 3-pak for $1 each.

The Power to Change…

This was the Feature Article in the Dec 9 Issue of Condevco's "Meter" Newsletter

Last month we talked about Continuous Improvement Process (CIP) in addressing how to approach getting your Chains or Stores ready for the holidays. Can Happy Holidays and Happy Retailing coexist with the current consumer mood and uncertainty facing the US economy? Yes it can, and it’s all about your power to change.

In one of the articles below, McDonald’s experienced only the fourth same-store sales declines in 6 ½ years in November, and they are pointing to overall job weakness as a contributing factor. Chevron is debranding over 1,100 stations in Selected Eastern US markets, and retailers are reporting a mixed bag of results for November sales. Change is occurring all the time.

Really, what this comes down to is this…You have the power to change how your business is doing. For the better or for the worse. The Holidays, whether you celebrate Christmas, Hanukkah, or Kwanzaa at this time of year, tend to reflect one message. The power of change and renewal.

Whether it’s Ebenezer Scrooge in “A Christmas Carol”, George Bailey in “It’s a Wonderful Life”, or Baby New Year, the chance to start over again is what makes the message of these year ending holidays resonate so deeply with people all over the world. This is the time of year that says renewal, redemption, refresh.

“Today is the first day of the rest of your life” is a phrase that popularized that message back in the ‘70’s, although no one seems to know where it first originated. As the holiday shopping season proceeds, and in many parts of the country, the weather gets cold and uninviting, it’s easy to look at this time as just another holiday season to be endured. Continuous Retail Improvement means looking to make a change, whether it’s incremental or sweeping, as soon as you recognize a way to make some aspect of your business better.

Let the Condevco Team help you make a fresh start by instituting Continuous Retail Improvement in your business today. (Click here to Contact us)

Retailers Face the Ghost of Christmas Present -Big Lots Up, Neiman Marcus Down, Others Hurting

January 2nd, 2009, I posted a blog entry to this Blog titled “The Ghost of Christmas (Just) Past as a little play on the dismal sales season. Click here to Read . At that time, one of the points made was trading down is the reality. I’m following it up now with what the retailers are facing at the moment: The Ghost of Christmas Present.

In the new retailing climate you see that in the last week’s worth of results reporting, Big Lots is up, and Neiman Marcus is down. Closeout retailer Big Lots Inc. posted a better-than-expected quarterly profit, aided by lower freight costs, and raised its outlook for the holiday fourth quarter. The retailer, which specializes in sales of excess inventory from home appliances to toys, also said it would immediately start buying back $150 million of common shares.

Conversely, upscale retailer Neiman Marcus Inc. reported sharply lower quarterly profit as worried consumers continued to avoid luxury items amid a slowdown the company expects will last for some time. Sales at its namesake Neiman Marcus and Bergdorf Goodman stores open for at least a year, or same-store sales, continued to fall, dropping 14.9 percent during the quarter. Overall comparable sales, including its direct marketing segment, declined 13.7 percent.

Neiman Marcus, in a regulatory filing on Wednesday Dec 9th, cited "a challenging economic and retail environment" that it said would likely persist for an "extended period of time." The downward sales trend has continued in the current quarter, it said. Last week the company reported same-store sales at its Neiman Marcus and Bergdorf Goodman stores had fallen 12.7 percent in November, a period that includes the busy holiday shopping weekend following Thanksgiving. Those two store chains account for about 83 percent of the company's revenue. Neiman Marcus said it experienced weak demand across all geographic areas and that its apparel and home decor categories were particularly hard hit.

Value Shopping In

Clearly, the trickle to value shopping has become a stampede.

Big Lots, which shut down its small Internet operation during the third quarter, sells merchandise that others cannot. When manufacturers are left with extra inventory due to a discontinued line or a change in packaging requirements, they call Big Lots, which will buy the merchandise and sell it in its stores at discounted rates. Big Lots has been somewhat insulated from the downturn as shoppers seek its low prices on staples like food or paper towels.

The better-than-expected results came a day after many retailers posted much weaker-than-anticipated November sales as shoppers were keenly focused on bargains. While consumers have been "very stingy" on discretionary purchases, the home category is actually one of the best performers so far in the fourth quarter, according to Big Lots.

Big Lots is reaching out to it’s customers by introducing a loyalty-card program to offer discounts to frequent shoppers during the quarter, which more than 600,000 have already signed up for, Fishman said. Early sales of Christmas seasonal merchandise, such as decorations, were tough in October, but sales of those items are up so far in the current fourth quarter, he said.

Big Lots Profit Jumps
Big Lots net income in the third quarter ended on October 31 rose to $30.3 million, or 37 cents per share, from $12.2 million, or 15 cents per share, a year earlier. Big Lots' third-quarter sales rose 1.3 percent to $1.04 billion, while same-store sales, or sales at its locations open at least two years, fell 0.2 percent.

Big Lots, which has been signing deals to open stores in better locations as other retailers close their doors, said it opened 52 new stores this year -- two more than initially planned for. It is also cutting back on closing stores, and now plans to shut just 30 locations this year instead of 40. Big Lots said it plans to keep opening stores in better spots as such locations are now available and the cost has declined. The company expects to once again open more stores than it closes in fiscal 2010 and beyond.

For the fourth quarter, Big Lots expects earnings per share from continuing operations of $1.09 to $1.14, up from its August forecast of 99 cents to $1.04. The company expects comparable store sales to rise between 1.5 percent and 2.5 percent for the fourth quarter, and said comparable sales rose in that range in November.

Neiman Marcus Experiencing Shrinking Sales and Profits
At the Luxury end of the retailing spectrum, Neiman Marcus said revenue in the fiscal first quarter, ended October 31, fell 11.9 percent to $868.9 million. The privately-held company reported a net profit of $8.5 million, down from $12.9 million a year earlier. Neiman Marcus was acquired by an investor group led by Texas Pacific Group and Warburg Pincus LLC in October 2005.

As has been the case with rival upscale retailers Saks Inc and Nordstrom Inc Neiman Marcus has maintained tighter inventory controls to avoid having to steeply discount merchandise to get it off shelves. Last year it was not uncommon to see luxury stores slash prices by 70 percent. Neiman Marcus said its comparable inventories were 22.5 percent lower in the quarter than a year earlier. Neiman Marcus wasn’t the only retailer feeling the holiday pain, though.

Slow Start to Holidays as Many Retailers Post Weak Sales
U.S. retailers from Macy's to Costco posted much weaker-than-expected sales for November as shoppers focused only on big bargains at the start of the key holiday selling season. Some, like department store operator Macy's also forecast quarterly earnings below analysts' estimates.

Out of 15 retailers that reported by early Thursday December 3rd, 11 missed analyst estimates, including Costco Wholesale, Children's Place, Walgreen and Hot Topic, according to Thomson Reuters data.

Over the U.S. Thanksgiving weekend, consumers focused mostly on promotional deals and made few impulse purchases as concerns about the economy remained top of mind, analysts and executives said. Shoppers Targeted the featured promotional Items and stayed away from impulse purchases on “Black Friday” and Cyber Monday. Store chains also blamed warm November weather, which kept consumers from buying winter clothes.
On December 3rd, Macy's shares fell 2.7 percent in trading before the market opened, while Costco declined 2.8 percent. Teen retailers Aeropostale and Abercrombie & Fitch also saw their shares sink more than 7 percent after disappointing November results. The November sales results include the day after Thanksgiving, traditionally known as "Black Friday," when retailers offer rock-bottom prices to kick off the holiday shopping season.

Early data on weekend shopping from the U.S. Thanksgiving Day on Nov. 26 through Sunday showed only a slight increase in retail sales from the comparable 2008 period, when consumers were hammered by a deepening recession and credit crisis. As of Black Friday, analysts had forecast a 2.5 percent rise in November sales at stores open one year, according to Thomson Reuters data. But estimates shrank since the weekend, and as of Wednesday, analysts expected a 2.1 percent increase. That would still be the best showing since April 2008 and compares with a 7.8 percent decline in 2008, the worst drop since data started being tracked in 2000.

Retailers Protecting Profits by Controlling Inventories
Even if sales are flat or rise modestly during the holiday season, analysts said retailers should report improved profits because they have cut inventories and pared back costs to avoid the huge discounts they were forced into last year. For example, Victoria's Secret owner Limited Brands forecast a low-to-mid-single-digit decline in December same-store sales, but said it planned to be less promotional this month. The company also posted "significantly" higher November margins, "driven by improvements in each main business," Amie Preston, vice president of investor relations at Limited, said in a recorded message.

Retail sales data are closely watched as consumer spending makes up roughly 70 percent of the U.S. economy. But the figures also give an incomplete picture because many of the retailers that are key holiday destinations, including industry leader Wal-Mart, Best Buy and Amazon.com , do not report monthly sales. Macy's said on Thursday that same-store sales fell a worst-than-expected 6.1 percent during the month. It stood by its forecast calling for quarterly earnings of $1.00 to $1.05 a share, excluding one-time items, but that was still below analysts' expectations.

Teen Retailers Mixed
Abercrombie & Fitch's same-store sales fell 17 percent, far worse than the analysts' average view of a 9.3 percent drop. Also on Wednesday the 3rd, teen clothing retailer Hot Topic posted a worse-than-expected 11.7 percent drop. Aeropostale sales came in slightly worse than expected, with a 7 percent increase. The company's quarterly earnings forecast also disappointed some investors.

Results Vary by Retailer
Costco said same-store sales rose 6 percent, missing the analysts' average estimate of 8.1 percent. Same-store sales at U.S. locations rose 2 percent.
Children's Place posted a 13 percent drop in comparable sales, including online sales, compared with analysts' expectations of a 1 percent rise. "Customers gravitated towards the sale merchandise," a company spokeswoman said in a recorded message.

Walgreen, one of the largest retailers that reports monthly same-store sales figures, on Wednesday posted a 3.9 percent rise for November, below analysts' expectations. The drugstore chain also said Thanksgiving weekend was "notably softer."

On the positive side, Limited posted a better-than-expected 3 percent increase and home furnishings retailer Pier 1 Imports cited a strong Thanksgiving weekend as it reported a 13.7 percent increase in same-store sales for its third quarter ended Nov. 28.

Chevron Withdrawing Brand from Selected Eastern U.S. Markets

Following the review of its U.S. retail portfolio, Chevron has decided to withdraw its motor fuels operations in some areas of the Eastern United States. As a result, approximately 1,100 independently owned and operated retail stations will be de-branded. They announced this on December 4th. The stations make up roughly 8 percent of its total U.S. sales volumes.

Areas Impacted
Impacted areas include Delaware, Indiana, Kentucky, North Carolina, New Jersey, Maryland, Ohio, Pennsylvania, South Carolina, Virginia, West Virginia, Washington, D.C., and parts of Tennessee, the company stated. Chevron expects to complete the planned market exits by midyear 2010. Chevron expects all of the stations to continue operating under other brands, and has a program in place to assist retailers with the transition, the company stated.

Chevron will continue to supply more than 5,000 Chevron and Texaco branded stations in the Eastern U.S., and will continue to develop and grow its retail presence in other areas of the U. S., according to the company.

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.

Burger King and Franchisees brawl over $1 Double Cheeseburger Promo

Burger King franchisees sued the burger restaurant chain this week over its $1 double cheeseburger promotion, saying they lose money on the sandwich deal and the company can't set maximum menu prices. The National Franchise Association, which is a group that represents over 80 percent of Burger King's U.S. franchise owners, said the $1 Double Cheeseburger promotion forces restaurant owners to sell the quarter-pound burger at a 10-cent loss at the minimum.

Too expensive to promote

Costs vary according to location, but the $1 double cheeseburger costs franchisees at least $1.10 typically, said Dan Fitzpatrick, a Burger King franchisee from South Bend, Ind. who is a spokesman for the association. The actual food costs about 55 cents for the meat, bun, cheese and toppings. The balance of the cost is for expenses such as rent, royalties and worker wages.

After the company tested the $1 deal in markets across the country, the discounted burger went national last month, in spite of the fact that franchise owners, which run 90 percent of the company's 12,000 locations, rejected the product twice before when offered, because of the expense.

A spokeswoman for Burger King, the nation's No. 2 hamburger chain, said the Miami-based company believes the litigation is "without merit," particularly after an earlier appeals court ruling this year showing the company had a right to require franchise owners to participate in its value menu promotions.

Restaurants looking to boost business

Restaurants in general, and particularly fast-food chains, have been slashing menu prices because of the poor economy. McDonald’s the nations #1 Burger chain has been aggressively promoting it’s $1 “Value Menu” for some time.

Restaurant executives at both fast-food and casual dining chains are hoping the deep discounts and combo deals will bring in diners who are spending less when they eat out, and lots have just been staying home altogether.

When the $1 double cheeseburger was announced this fall, analysts felt it could increase visits to Burger King by as much as 20 percent. The lawsuit was filed Tuesday in U.S. District Court in Southern Florida.

Continuous Retail Improvement through the Holidays

This was the feature article in the Nov 3, 2009 Issue of Condevco's "Meter" Newsletter.

As we begin to get ready for the holiday season, hope springs eternal, or it should. It’s time to look at what we can do to make these holidays happy, for our customers, Associates and our businesses bottom lines.

As we have been discussing, this hasn’t been a banner years for business in general. In our specific business, gasoline prices are rising again, and there is always the possibility of a price spike shocking customers into not spending inside the store, like in the summer of 2008.

As of Friday October 30th Retail gasoline was at its highest average price in over a year. (See the article below) Using the “Sports quote of 2004” according to USA Today, which has become ubiquitous and irritating in ALL phases of conversation by now in 2009; “It is what it is” Gasoline Prices are what they are… But that doesn’t mean you need to let that affect how you get ready for and operate through the holidays inside your store and on your store site. In other words, the things you CAN control.

Wikipedia defines Continuous Improvement Process (CIP, or CI) is a management process whereby delivery (customer valued) processes are constantly evaluated and improved in the light of their efficiency, effectiveness and flexibility. In other words, “It is what it is, but it doesn’t have to be!”

With the holidays approaching and the big retailers having been in full holiday mode for weeks, it’s time to look at where your stores are now, and make the decision to continually improve the retail offering (the infamous “Value Proposition”) straight through to January.

That means keeping any seasonal decorations repaired and cleaned and looking fresh, perhaps a store mini-reset halfway through the season with some new items, and getting your customer service associates to “Buy In” to the fact that the next eight weeks can be the best eight weeks of the year.

Should you start selling Blu-ray players or flat screen TV’s? Probably not, but making sure you have the holiday-themed candy and drinks in the foreground is good. This is an excellent time for new uniforms, painting the curbs, and making sure those nozzles and hoses are clean and working well.

This is a chance to really make a positive impression on your customers. It doesn’t cost much to make a big difference in how “Jolly” your customer’s perception of your stores is.

This is a great time of year for ice sales and fill-in party supplies. ATM’s and Money orders are big services.

Let Darcee and Ron, the team from Condevco help you on the way to Continuous Retail Improvement (Click To Inquire)