As we discussed in our 2/24/10 post, “MCD – NEGATIVE $ MENU POINT”, MCD is using significant discounting to drive transaction counts during the breakfast day part. MCD comparable store sales trends have been in decline since October and, while it seemed that discounting initiatives would help stymie the decline in the company’s comps, it seems clear that this will be a difficult task until (at least) June or July.
The success of the current dollar menu at breakfast will not be enough to turn around the deceleration in top line trends in the USA.
In Europe, MCD is seeing slowing sales trends also. The most recent economic data points from Germany suggest that this trend is likely to continue for the immediate future. In addition, The China Daily reported today that MCD is now accepting some coupons issues by other fast-food chains at its China stores. The promotion began on February 24th and ends on March 23rd. McDonalds has also cut prices on some products in the midst of severe competition with QSR rivals, local, and street vendors. In 1H10, lower commodity costs will somewhat offset the top line pressure in margins. See below for charts on Europe and APMEA top line trends.