McDonald’s sales hit by weakness in Asia, Europe

First Posted: 5/8/2013

(AP) McDonald’s says a key sales figure slipped again in April, with the world’s biggest hamburger chain citing fears over a new strain of avian flu for weakness in China.

The Oak Brook, Ill.-based chain, which had warned of a decline last month, says the figure fell 0.6 percent globally. That reflected an increase of 0.7 percent in the U.S., where it recently introduced its chicken McWraps to attract more customers in their 20s and 30s.

But it fell 2.4 percent in Europe, its biggest market by sales. The company said it’s working to improve results in the region by emphasizing “everyday affordability” and keeping stores open longer.

In the region encompassing Asia, the Middle East and Africa, it was down 2.9 percent. The chain blamed the impact of the avian flu in China for the decline, as well as softness in Japan and Australia.

Yum Brands Inc., which owns KFC and is China’s biggest Western fast-food company, has been slammed by the new strain of avian flu as well. It warned late last month that sales at established restaurants in China were down about 30 percent in April. Yum is also trying to recover from a controversy over its chicken suppliers that surfaced late last year.

After years of outperforming rivals, McDonald’s has been struggling to boost sales as it faces intensifying competition, changing eating habits and weak growth in the broader restaurant industry. Late last year, the company reported a decline in its monthly sales figure for the first time in nearly a decade. Soon after, the company ousted the head of its U.S. division.

CEO Don Thompson, who took over the top spot this summer, has said repeatedly that the company will focus on emphasizing value to capture market share in the tough environment. Analysts have raised concerns that the strategy could eat into profit margins. But McDonald’s executives say that short-term sacrifice is necessary to build customer loyalty and ensure the long-term health of the company.

The chain is also working to make its food more relevant to shifting tastes. Its chicken McWraps, for example, are intended to cater to people who are seeking out fresher, healthier items. The company also recently introduced a lower-calorie version of its Egg McMuffin made with egg whites and a whole grain muffin.

Sales at restaurants open at least 13 months is a key metric because it strips out the impact of newly opened and closed locations.

McDonald’s, which was more than 34,000 locations around the world, noted that it had one less Sunday and one more Tuesday in April of this year compared with April of last year. Sales are generally stronger on weekends.