Menu offerings, promotions fall short of expectations
By Candice Choi, Food Industry Writer
A dropoff in customers at its U.S. restaurants contributed to a 13 percent decline in McDonald's second-quarter profit.
The world's biggest burger chain said Thursday that sales fell 2 percent at established U.S. locations, as featured menu offerings and promotions failed to live up to expectations against competitors. It's the seventh straight quarterly decline in that figure.
The company didn't cite specific examples. But among its marketing efforts during the quarter were ads featuring its Hamburglar character, revamped as a grown man wearing a mask, black trench coat and a fedora with a yellow stripe. The character was used in ads for the chain's limited-time sirloin burgers.
Overseas, McDonald's said the sales figure rose 1.2 percent in Europe and fell 4.5 percent in the segment including Asia, the Middle East and Africa. On a global basis, the figure fell 0.7 percent.
Looking ahead, CEO Steve Easterbrook said the company is seeing early signs of momentum and that global sales at established locations are expected to be positive in the third quarter.
McDonald's, which has more than 36,000 locations around the world, is trying to regain its footing after seeing its profit sink 15 percent last year.
In the U.S., the company is up against changing eating habits and intense competition. Last week, Yum Brands said Taco Bell sales at established locations rose 6 percent for the quarter. The same figure rose 4.3 percent at burrito chain Chipotle and 2.9 percent at Dunkin' Donuts.
McDonald's has admitted it created some of its own problems, such as letting its menu get too complicated. That affected wait times and order accuracy.
To adapt, McDonald's is looking at ways to make its menu more flexible, such as serving popular breakfast items all day and letting people build their own burgers by tapping a touchscreen. It's also trying to improve perceptions about the quality of its ingredients, and started a campaign last year inviting people to ask questions about its food.
For the quarter ended June 30, the company earned $1.2 billion, or $1.26 per share. Analysts on average expected $1.23 per share, according to Zacks Investment Research.
A year ago, the company earned $1.39 billion, or $1.40 per share.
Total revenue was $6.5 billion, ahead of the $6.45 billion Wall Street expected.
Canada orders TikTok’s Canadian business to be dissolved but won’t block app
Canada announced Wednesday it won't block access to the popular video-sharing app TikTok but is ordering the dissolution of its Canadian business after a national security review of the Chinese company behind it.
Industry Minister François-Philippe Champagne said it is meant to address risks related to ByteDance Ltd.'s establishment of TikTok Technology Canada Inc.
"The government is not blocking Canadians' access to the TikTok application or their ability to create content. The decision to use a social media application or platform is a personal choice," Champagne said.
Champagne said it is important for Canadians to adopt good cybersecurity practices, including protecting their personal information.
He said the dissolution order was made in accordance with the Investment Canada Act, which allows for the review of foreign investments that may harm Canada's national security. He said the decision was based on information and evidence collected over the course of the review and on the advice of Canada's security and intelligence community and other government partners.
A TikTok spokesperson said in a statement that the shutdown of its Canadian offices will mean the loss of hundreds of local jobs.
"We will challenge this order in court," the spokesperson said. "The TikTok platform will remain available for creators to find an audience, explore new interests and for businesses to thrive."
TikTok is wildly popular with young people, but its Chinese ownership has raised fears that Beijing could use it to collect data on Western users or push pro-China narratives and misinformation. TikTok is owned by ByteDance, a Chinese company that moved its headquarters to Singapore in 2020.
TikTok faces intensifying scrutiny... Read More