Fast Food juggernaut McDonald’s released its earnings Tuesday. The company’s share price is less than super-sized. Comparative global sales dropped 3.3 percent in the third quarter. The Q3 report comes on the heels of the company’s troubles in China, where suppliers reportedly sold expired meat to stores.
As a result sales were down significantly in Asia, and the company upped spending on marketing to reassure customers that its food was safe.
But the bigger threat to McDonald’s is the drop U.S. and European sales, says Sara Senatore, a senior research analyst at Sanford Bernstein: “Same store sales declined pretty meaningfully in both regions.”
Analyst Howard Penney attributes much of the sales slump to McCafe, the company’s rebranding of the old fashioned hamburger stand into something more Parisian shall we say. “They over indexed themselves to beverages in McCafe and that really changed the structure of the business and complicated the back of the house,” says Penney.
CEO Don Thompson acknowledged the company’s troubles in Asia the U.S. He also blamed the diluted earnings on a higher effective tax rate.
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