The world's largest restaurant operator said it faced ''softening industry growth'' in the latest quarter. As Fred Katayama reports, its same store sales widely missed expectations.
Slowdown in momentum at McDonald's. Quarterly sales at its existing U.S. restaurants rose 1.8 percent - far shy of what analysts had anticipated. The world's largest restaurant operator said it experienced "softening industry growth." The industry has been in the doldrums as falling grocery prices induce customers to cook at home instead of go out. Profit and revenue fell, partly due to the costs of the company's drive to sell its company-owned stores to franchisees. McDonald's had been on a comeback under CEO Steve Easterbrook, getting a lift from its All-Day breakfast menu and McPick 2 promotion that allows diners to choose any two items for $5. Morningstar analyst R.J. Hottovy says while Easterbrook deserves credit, the company faces a challenge in the second half because "it'll have to emphasize value in a slowing traffic environment as labor costs go up, so margins might be positioned to contract." McDonald's shares fell in early trading. They had been vastly outperforming their peers over the last 12 months with a nearly 33 percent gain.