3
Recession takes bite out of McDonald's
McDonald's breakfast items
To view this content, Javascript must be enabled and Adobe Flash Player must be installed.
TEXT OF STORY
Kai Ryssdal: Outside the beltway today, the corporate news of the day came with fries and a Coke. McDonald's unveiled quarterly profits this morning. Investors were left less than completely satisfied. Sales growth slowed here in the United States. It fell outright in Asia.
But if you're thinking to yourself right about now -- hang on just a second. Cause a couple of months ago I heard this story on Marketplace about how McDonald's was going to do just fine in this recession. You did hear that story. But the change in fortunes at the Golden Arches speaks to how even the best-positioned brands can get themselves into trouble. From Washington, Marketplace's Steve Henn reports.
STEVE HENN: Rafael Rodriguez is the kind of customer McDonald's executives used to call "a heavy user." He comes a lot.
RAFAEL RODRIGUEZ: Ahh, at least twice or three times a week. Yeah, it's quick easy drive through.
And it's pretty affordable.
RODRIGUEZ: It's Egg McMuffin, large O.J., and hashbrown.
For $5.18
Meals like that were supposed to make Micky-Dees immune to this economic downturn. McDonald's was one of the only stocks to actually gain value in 2008. Or at least that was the story from restaurant analysts like Tom Forte at the Telsey Group.
TOM FORTE: So what you had initially was a consumer who was trading down from TGI Fridays and Applebee's and Ruby Tuesdays and others into McDonald's and Burger King.
We were all supposed to trade our Starbucks for McCafes. But recently Rodriguez, who frequents a McDonald's on Grand Avenue in Los Angeles, noticed a change in the morning crowd.
RODRIGUEZ: Yes, you can tell there's less people.
Turns out the great recession is hurting McDonald's too. Unemployment topped 9.7 percent last month, and if you lump in folks whose hours have been cut, nearly one in six Americans is unemployed or under-employed. Analyst Tom Forte...
FORTE: Now by necessity, given the high rate of unemployment, you are seeing consumers opting out of all forms of dining away from home.
Forte says we are all trading down again. This time giving up Big Macs for cans of Chef Boyardee.
In Washington, I'm Steve Henn for Marketplace.
Enjoyed listening to your revisit to Mc'D's profits and how they have not increased per the pundits & fortune tellers' predictions. It is truly healthy to see a major news source to go back and review a historical story and do a check-&-adjust. If more and more Americans are foregoing even fast food to eat at home, I hope they are making healthy choices in what they eat at home (and not just "opening cans of Chef Boyardee") because as Americans living in the only country on the planet that claims obesity to be "disease", until we take a long hard look at the quality AND quantity of what we are simply shoving into our mouths, the root cause of health care costs will continue to go up since we are not eating to healthiness. I wish the President would address that point in his nationwide speeches while he delivers up nicely sounding rhetoric for sound bites.
Hi Kai-
MacDonalds- I havn't eaten there in at least 20 years, but I've drunk plenty of their coffee up until as recently as 11 years ago. It is difficult to get to their store anyhow- one time it was easy as it was downtown (that was the 70's &early 80's). It was a good place to hang out and read.
When I was a kid I loved the place, especially since my step-mom paid!
This is the type of one-sided reporting I'd expect on a Fox report. McDonald's sales are still growing in the US, and even more so in Europe. If I hadn't just read this fact before listening to this report, I'd have thought that Mickey D had hit the skids. I expect more even-handedness from NPR.
