With disappointing same-store sales performance across all four segments, it isn’t surprising that McDonald’s reported revenues of $6,987 million. This was a 4.5% decline compared to revenues of $7,323 million in the same quarter last year.
Revenues by segment
From top to bottom, revenues in the Asia Pacific, Middle East, Africa (or APMEA) region dropped the most from $1,683 million in 3Q13 to $1,531 million. It was a 9% decline as of 3Q14. The company-owned revenues in the APMEA region declined 10% to $1,278 million—from $1,421 million in 3Q13.
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Other Countries (or OCC) followed with a 6% decline in revenues from $396 million to $370 million in 3Q14. Company-owned restaurants were hit the most with a 9% decline in revenues to $197 million—from $217 million in 3Q13.
The U.S. segment experienced a decline in revenues by 4% year-over-year (YoY)—from $2,289 million to $2,202 million in 3Q14. U.S. company-owned restaurants declined 6% YoY to $1,097 million—from $1,162 million in 3Q13.
Finally, the Europe segment revenues declined 2% YoY to $2,884 million—from $2,995 million in 3Q13. Company-owned revenues in Europe declined 5% to $2,024 million—from $2,124 million YoY. The Europe franchise was the only segment with a 3% revenue growth. It increased to $861 million—from $832 million in 3Q13.
McDonald’s also faced commodity cost pressures. The pressures increased due to shortages—like beef supply. A restaurant can pass these costs to the customer by increasing menu prices. However, this is a challenge for McDonald’s because it targets price sensitive customers. We’ll discuss this more in the next part of the series.