McDonald's November Sales Fall More Than Expected

By Chelsey Dulaney 

McDonald's Corp. posted sharper-than-expected sales declines across all of its divisions in November, as the fast-food giant continues to struggle with competition and a host of issues across its business.

Global sales fell 2.2% in November, excluding newly opened stores, while analysts had expected a 1.7% decline, according to Consensus Metrix. November's dropoff followed a 0.5% sales slide in October that beat expectations.

In the U.S., sales fell 4.6% last month, far worse than the 1.9% drop in sales analysts had projected.

An increasingly complicated menu has slowed service in the U.S. as McDonald's once-reliable base of younger customers have also defected to fast-casual chains boasting customized ordering and fresh ingredients, including Chipotle Mexican Grill Inc., and specialty-burger chains such as Five Guys.

McDonald's has said it is planning "fundamental changes to its business" to combat its recent weak performance, seeking to eliminate layers of management and creating a new organizational structure in the U.S. as it works to better respond to consumer tastes.

In the company's Asia/Pacific, Middle East and Africa region, sales at existing locations fell 4%, missing the 3.8% drop analysts were expecting. McDonald's performance in the region appears to be improving somewhat after one of its meat suppliers was accused of intentionally selling expired meat to restaurants in July. The scandal shook consumer confidence and has driven down sales in recent months.

November's decline was a slight improvement over October's 4.2% sales decline in the region.

In Europe, broader economic softness has been compounded by political complications in Russia, where authorities have been inspecting and shutting McDonald's restaurants--moves widely seen as retaliation for U.S. sanctions in response to Russia's military incursion in Ukraine.

Sales edged fell 2% in the division in November as "very weak results" in Russia offset strength in the U.K.. Analysts had projected a 1.9% decline in the region.

Write to Chelsey Dulaney at [e-mail]

Access Investor Kit for Chipotle Mexican Grill, Inc.

Visit http://www.companyspotlight.com/partner?cp_code=P479&isin=US1696561059

Access Investor Kit for McDonald's Corp.

Visit http://www.companyspotlight.com/partner?cp_code=P479&isin=US5801351017

Subscribe to WSJ: http://online.wsj.com?mod=djnwires