McDonald's Closing Hundreds Of Restaurants As Sales Slide
NEW YORK (AP) — McDonald's plans to unwrap a plan next month that it says will help turn around sales declines around the world.
CEO Steve Easterbrook, who stepped into the role just last month, said Wednesday the company will share "initial details" of the plan May 4.
"I think there is a hunger and an interest in our business to embrace change," Easterbrook said during a conference call. While McDonald's has been "phenomenally successful" for decades, he said that has also made the company conservative.
The world's biggest hamburger chain said global sales declined 2.3 percent at established locations during the first three months of the year, with results for April expected to be negative as well. The drop included a 2.6 percent drop in the U.S., where people are increasingly heading to places that market their food as more wholesome.
Already this year, McDonald's has announced a number of changes in the U.S. including a simplified grilled chicken recipe and curbing the use of antibiotics in raising chicken. Amid ongoing protests calling for pay of $15 an hour and a union for fast-food workers, it also said it would raise wages and offer vacation time for workers at company-owned stores.
McDonald's is trying to change its image while its competition is taking its customers.
A day earlier, Chipotle Mexican Grill said its sales rose 10.4 percent at established locations during the quarter, as a pork shortage and bad weather damped results. The chain has been enjoying strong sales growth, with executives saying the company is changing the way people think about fast food.
Taco Bell's parent company, Yum Brands, said the chain's sales rose 6 percent during the period. The increase was helped by the introduction of Taco Bell's breakfast menu, which has repeatedly targeted McDonald's in its advertising.
Meanwhile, McDonald's is struggling in other regions of the world as well. During the first quarter, the unit encompassing Asia, the Middle East and Africa reported an 8.3 percent drop in sales at established locations, hurt by a supplier controversy in China last year and ongoing consumer perception issues in Japan.
Sales at established locations dipped 0.6 percent in Europe because of softness in France and Russia.
Around the world, the company said that it was doubling the number of store closures this year to about 700. It said it would provide an update on its overall expansion plans May 4.
For the period ended March 31, McDonald's Corp. earned $811.5 million, or 84 cents per share. That compares with $1.2 billion, or $1.21 per share, a year earlier.
Results were weighed down by 17 cents per share in charges. The stronger dollar hurt its results by 9 cents per share.
Stripping out these items, earnings were $1.10 per share. That was more than the $1.05 per share analysts expected, according to Zacks Investment Research.
Revenue for the Oak Brook, Illinois-based company declined to $5.96 billion from $6.7 billion. Analysts expected $6.02 billion in revenue.
Shares of McDonald's Corp. added $2.97, or 3.1 percent, to close at $97.84.
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