Industry News | March 9, 2015

McDonald's Sales Decreased 1.7 Percent in February

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McDonald's Corporation announced that global comparable sales decreased 1.7 percent in February. Performance by segment was as follows: U.S. down 4.0 percent; Europe up 0.7 percent; and Asia/Pacific, Middle East and Africa down 4.4 percent.

Creating consistently relevant and satisfying customer experiences have been hallmarks of McDonald's business and historic success. However, consumer needs and preferences have changed, and McDonald's current performance reflects the urgent need to evolve with today's consumers, reset strategic priorities, and restore business momentum. The goal going forward is to be a true destination of choice around the world and reassert McDonald's as a modern, progressive burger company.

U.S. comparable sales decreased 4.0 percent in February due to ongoing aggressive competitive activity. McDonald's U.S. began March with a Turnaround Summit designed to deliver renewed energy and focus around the elements of the restaurant experience that matter most to customers: relevant, high-quality food and beverage offerings, compelling value, and outstanding service from a trustworthy brand.

In Europe, comparable sales increased 0.7 percent in February as positive performance in the U.K. and Germany was partly offset by negative results in Russia. Amid Europe's macro-economic headwinds, McDonald's continues to pursue a balanced approach to driving the business through new menu offerings, emphasis on core menu favorites, and unique value options.

APMEA's February comparable sales decreased 4.4 percent due primarily to the broad-based consumer perception issues in Japan, partly offset by a benefit from the shift in timing of Chinese New Year in China and certain other markets, as well as positive results in Australia. Rebuilding brand trust by strengthening McDonald's quality and value perceptions is one of APMEA's top priorities for 2015.

Strong comparable sales in McDonald's Other Countries & Corporate segment, which includes Latin America and Canada, contributed positively to the company's global comparable sales performance for the month.

 Systemwide sales for the month decreased 8.0 percent or increased 0.5 percent in constant currencies.

Comparable sales represent sales at all restaurants, whether operated by the company or by franchisees, in operation at least 13 months including those temporarily closed. Some of the reasons restaurants may be temporarily closed include reimaging or remodeling, rebuilding, road construction, and natural disasters. Comparable sales exclude the impact of currency translation. Comparable sales are driven by changes in guest counts and average check, which is affected by changes in pricing and product mix. Typically, pricing has a greater impact on average check than product mix. Management reviews the increase or decrease in comparable sales compared with the same period in the prior year to assess business trends.

The number of weekdays and weekend days can impact our reported comparable sales. For the month of February 2015, there was no calendar shift/trading day adjustment as the month included exactly 28 trading days, or four complete weeks, during 2015 and 2014. In addition, the timing of holidays can impact comparable sales.

Information in constant currency is calculated by translating current year results at prior year average exchange rates. Management reviews and analyzes business results excluding the effect of foreign currency translation and bases incentive compensation plans on these results because they believe this better represents the company's underlying business trends.

Systemwide sales include sales at all restaurants, whether operated by the company or by franchisees. While franchised sales are not recorded as revenues by the company, management believes the information is important in understanding the company's financial performance because these sales are the basis on which the company calculates and records franchised revenues and are indicative of the financial health of the franchisee base.

McDonald's tentatively plans to release first quarter results before the market opens on April 22, 2015 and will host an investor webcast. This webcast will be broadcast live and available for replay for a limited time.

McDonald's is the world's leading global foodservice retailer with over 36,000 locations serving approximately 69 million customers in over 100 countries each day. More than 80 percent of McDonald's restaurants worldwide are owned and operated by independent local businessmen and women.

News and information presented in this release has not been corroborated by QSR, Food News Media, or Journalistic, Inc.

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