McDonald’s same-store sales
In the last part of this series, we learned that McDonald’s earnings per share (or EPS) declined 28% year-over-year (or YoY). At the top of its income statement, McDonald’s (MCD) revenues declined 4.5% YoY.
Revenues in the restaurant industry are mainly driven by same-store sales and unit growth. The global same-stores sales were down to -3.3% YoY. McDonald’s reports its revenues under four segments:
- Other Countries and Corporate
- Asia Pacific, Middle East, Africa (or APMEA)
Same-store sales in the U.S. declined -3.3% in the third quarter. It was 0.7% in the same quarter last year. The company stated that its U.S. sales suffered because it didn’t meet customers’ expectations. This may hint towards a demographic shift in the U.S.
Same-store sales disappointed in Europe as well. They declined -1.4%—compared to a growth of 0.2% in the same quarter last year. Germany’s market continued to experience negative same-store sales. Later in the series, we’ll discuss management’s initiatives to turn the situation around.
Other Countries and Corporate
This segment had positive same-store sales. It grew 5.6%. However, it was lower compared to the same-store sales of 8.6% in the same quarter last year.
The APMEA region had the biggest decline in same-store sales. It declined -9.9%—compared to -1.4% in the same quarter last year.
APMEA’s same-store sales were dragged down—particularly by China. China’s market was as affected by the meat supplier scandal. The scandal also impacted restaurant companies like Yum! Brands (or YUM), Burger King (BKW), and Starbucks (SBUX). These companies are part of the Consumer Discretionary Select Sector SPDR Fund (XLY).
Since China is an important emerging market for many restaurant companies, we’ll discuss it in the next part of the series.