McDonald's Reports Disappointing Results

By Chelsey Dulaney 

McDonald's Corp. on Friday posted a worse-than-expected 21% drop in earnings its December quarter, rounding out a dismal year for the fast-food chain that prompted core changes to its business.

"2014 was a challenging year for McDonald's around the world. Our results declined as unforeseen events and weak operating performance pressured results in each of our geographic segments," Chief Executive Don Thompson said in a news release. "Our business continues to face meaningful headwinds."

McDonald's has been working to rejuvenate its business in recent months after posting some of its worst monthly sales figures in more than a decade last year.

The company has been losing customers to fast-casual chains and to such rivals as Five Guys Holdings LLC and Chick-fil-A Inc. that focus on just a few menu items. McDonald's menu has become bloated in recent years as the chain has added everything from fruit smoothies to salads in a bid to appeal to a broad range of customers. The result has been slower service, which has driven away many customers.

Mr. Thompson has vowed to fix the problems, announcing plans to cull menu items and give customers the option of more customized ordering. Executives also have said the chain plans to study every ingredient in its products and to review different cooking and holding techniques to improve the quality of its food.

Overall, McDonald's reported a profit of $1.1 billion, or $1.13 a share, down from $1.4 billion, or $1.40 a share, a year earlier.

Revenue fell 7.3% to $6.57 billion, as global same-store sales dropped 0.9%.

Analysts polled by Thomson Reuters had expected earnings of $1.22 a share on revenue of $6.68 billion.

Same-store sales in its U.S. division fell 1.7%, while sales in its Europe division fell 1.1%.

Write to Chelsey Dulaney at [e-mail]

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