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    McDonald’s profit falls as customer traffic slips in US

    By SHOOTUpdated:No Comments1001 Views
    In this Dec. 17, 2014, file photo, a man walks by a McDonald's restaurant in Tokyo. (AP Photo/Eugene Hoshiko, File)

    Menu offerings, promotions fall short of expectations

    By Candice Choi, Food Industry Writer

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    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.

    Tags:McDonald's



    DirecTV calls off acquisition of rival Dish, possibly ending a yearslong pursuit

    Friday, November 22, 2024
    Dish Network satellite dishes are shown at an apartment complex in Palo Alto, Calif., Feb. 23, 2011. (AP Photo/Paul Sakuma, File)

    DirecTV is calling off its planned acquisition of rival Dish after the offer was rejected by bond holders at that company.

    The deal was reliant on Dish bond holders agreeing to trade in the debt they held for debt in the new company, a swap that would have cost them about $1.6 billion, collectively.

    The retreat by DirecTV this week may end a years-long effort by the company to acquire both Dish and Sling after it announced the bid in September.

    DirecTV was looking to acquire Dish TV and Sling TV from its owner EchoStar in a debt exchange transaction that included a payment of $1, plus the assumption of approximately $9.8 billion in debt. The deal was contingent on several factors, including regulatory approvals and bondholders writing off debt related to Dish.

    "While we believed a combination of DirecTV and Dish would have benefited all stakeholders, we have terminated the transaction because the proposed exchange terms were necessary to protect DirecTV's balance sheet and our operational flexibility," DirecTV CEO Bill Morrow said in a statement.

    The prospect of a DirecTV-Dish combo has long been rumored, and reported talks resurfaced over the years. And the two almost merged more than two decades ago — but the Federal Communications Commission blocked the deal valued at the time at $18.5 billion deal, citing antitrust concerns.

    The pay-for-TV market has shifted significantly since. As more and more consumers tune into online streaming platforms, demand for more traditional satellite entertainment continues to shrink.

    DirecTV says that it will continue to invest in next-generation streaming platforms and offer new packaging options while integrating content from live TV alongside direct-to-consumer... Read More

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