McDonald's sees slack U.S. demand, so it's cooking up dollar breakfast deals

It seems McDonald's (MCD) is more popular overseas than at home. The iconic fast-food chain reported Monday that sales at outlets open at least 13 months rose 3.3% overall last month as diners flocked to its restaurants in Europe, Asia and Africa.

In the U.S., however, customers were less enthusiastic. Domestic same-store sales for the Oakbrook, Ill., company were basically flat in October, slipping 0.1%. The slack demand in the U.S. may be a primary reason the ubiquitous burger chain plans to offer a dollar menu for breakfast items beginning in January, The Wall Street Journal (subscription required) reported.

Europe provided McDonald's with its largest sales jump last month, rising 6.4%, helped by robust demand in the U.K., France and Germany. Comparable-store sales in the Asia Pacific, Middle East and Africa market rose 4.7%, with sales strongest in Japan and Australia.

In the U.S., McDonald's said the comparison to strong prior-year performance resulted in nearly flat U.S. sales, despite good demand for dollar-menu items, premium Angus burgers and McCafe espresso-based coffees.

The plan to begin offering a dollar breakfast menu has been
"overwhelmingly approved" by the chain's national advertising fund, which will run a nationwide ad campaign during the first half of next year, the Journal said, citing a document reviewed by Dow Jones Newswires.

Breakfast Burritos for a Buck

The breakfast menu strategy will be put to a vote of regional advertising groups with the national group's recommendation and a sense of urgency "to ensure that breakfast continues to be a strong contributor to our overall sales, guest count and profit growth," the document said.

McDonald's declined to comment on the plan. "Matters concerning the future of our business and internal discussions are confidential and proprietary to the McDonald's system," says spokeswoman Danya Proud. The company has offered a dollar breakfast menu in test markets, selling items such as breakfast burritos, hash browns and sausage McMuffins for a buck.

It's likely McDonald's breakfast sales have been hurt by the rising number of unemployed workers in the U.S. On Friday, the Labor Department reported the nation's unemployment rate rose to 10.2%. Greater numbers of jobless workers hamper breakfast sales because fewer commuters stop for a morning meal before heading to work. Some of the fast-food industry's most frequent visitors -- teenagers and men between the ages of 18 and 35 -- have even higher rates of joblessness, reported.

Shares of McDonald's were higher in early trading on Monday, advancing about 1.5% to $62.70 a share.
Read Full Story

From Our Partners