By Ben Fox Rubin
McDonald's Corp. said its profit for the first three months of
the year dropped 5.2% as the fast-food giant worked to revive its
U.S. sales growth following a challenging 2013.
The results missed expectations.
The fast-food chain has struggled to improve sales lately, and
Chief Executive Don Thompson recently said the company has lost
relevance with some customers and needs to strengthen its menu
offerings.
Mr. Thompson said Tuesday that the company is focused on
stabilizing its key priority markets, including the U.S. Germany,
Australia and Japan.
Looking to April, he said global sales at restaurants open more
than a year are expected to be modestly positive.
Overall, McDonald's reported a profit of $1.2 billion, or $1.21
a share, down from $1.27 billion, or $1.26 a share, a year
earlier.
Revenue improved 1.4% to $6.7 billion, though costs rose faster,
at 2.3%.
Analysts polled by Thomson Reuters forecast earnings of $1.24 a
share on revenue of $6.72 billion.
Global sales at restaurants open more than a year rose 0.5%
during the quarter, helped by higher average checks, despite weaker
guest traffic in several key markets, including the U.S.
Franchisees and executives have said the McDonald's menu has
become overly complicated, with the addition of more new items
slowing service and turning off customers. Despite struggles in
2013, Mr. Thompson recently said he expects improvement this
year.
Same-store sales in the U.S. fell 1.7%, which the company blamed
on weaker guest traffic amid challenging industry dynamics and
severe winter weather. The company reiterated its commitment to
improving U.S. results, in part through customer engagement and
menu choices.
In Europe, same-store sales grew 1.4%, as positive sales
performance in the U.K., France and Russia was partially offset by
ongoing weakness in Germany.
The Asia/Pacific, Middle East and Africa region's same-store
sales edged up 0.8%, reflecting strength in China offsetting
weakness in Japan.
Write to Ben Fox Rubin at ben.rubin@wsj.com
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