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“Around the world, we are focused on providing the menu quality and choice, customer service and affordability that are the hallmarks of the McDonald’s experience.”


- McDonald’s October Press Release

Despite management’s aforementioned focus, there is something that is not resonating with McDonald’s customers.  While MCD is a fundamentally strong company, we find it difficult to believe that it will be able to drive “initiatives that will deliver the greatest benefit” for McDonald’s customers, as promised. 

The charts below show sales trends across MCD’s four main regions – and they are not pretty.  October’s results prove that same-store sales continue to steadily decelerate on a two-year basis.  That said, we are comfortable in reiterating our view that McDonald’s has legitimate, inherent issues that management must address.

Next week, McDonald’s will host its analyst day to address the initiatives management has lined up for 2014 in order to stem the decline in global sales.  Our research tells us that the company will make an aggressive push to sell more coffee in attempt to capture incremental market share in the coffee category next year.  We expect this to be a main topic at the analyst day on November 14, 2013.

Our goal is to understand the potential consequences, both good and bad, of this strategy.  Delving more into this topic, we have conducted a proprietary Retail Coffee Consumer Survey, which features some of the top coffee retailers, including MCD, SBUX, DNKN, KKD, and Peet’s. 

We will be holding a conference call on Tuesday, November 12th at 11: 00am EST in order to present our findings and analysis.

MCD: #GROWTH SLOWING - MCD SSS

 

MCD: #GROWTH SLOWING - MCD table

 

Howard Penney

Managing Director