globaleconomicanalysis.blogspot.com / By Mike “Mish” Shedlock / Tuesday, October 23, 2012 11:53 AM
McDonald’s is facing lean times, not just in the US, but globally.
Earlier this year, McDonald’s shifted from a ‘Dollar Menu’ to an “Extra Value Menu” which Chief Executive Don Thompson said didn’t “resonate as strongly” with consumers.
One reason? There was no value in it, except for McDonald’s.
The Wall Street Journal reports Amid Falling Profit, McDonald’s to Revisit ‘Dollar Menu’
McDonald’s Corp. reported a 3.5% decline in third-quarter earnings as sales slowed more dramatically than expected because of a sluggish economy and a disappointing marketing campaign.
“We face softening demand, heightened competition and rising costs in many of our markets,” Chief Financial Officer Pete Bensen said. In a weaker economy, customers tend to stop getting extras like drinks and desserts and premium items like Angus burgers, which all offer higher profits to McDonald’s. Plus, they may not go out to eat as frequently.
Wall Street analysts were expecting an increase in per-share profit for the quarter, not a decline.
“We’re going back to talk of the Dollar Menu,” Mr. Thompson said.
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