McDonald’s reported Tuesday that global sales at stores open more than a year dropped 3.7 percent in August. That was the company’s worst month for what are known as "same-store sales," a key retail metric, since the Spring of 2003, according to Mark Kalinowski, a managing director at Janney Capital Markets. This is the second month in a row that McDonald’s has reported global same-store sales that set 10-year marks for awfulness.
“It is challenging out there,” Kalinowski said. “Even McDonald’s realizes that this is unlikely to be a quick fix here.”
The Golden Arches’ global performance was dragged down largely by what it calls its Asia/Pacific, Middle East and Africa region, where same-store sales plunged 14.5 percent. McDonald’s is still recovering after a video surfaced showing workers at one of its meat suppliers in China engaging in unhygienic practices, including picking up meat off the floor and putting it back in a processing machine. McDonald’s was forced to pull meat off menus in many China outlets after the scandal came to light.
McDonald's “is in the process of undertaking recovery strategies in order to restore customers' trust and confidence” in the region, the company said in a press release.
McDonald’s is also struggling at home. The economic downturn and slow recovery means that low-income diners aren't spending as much on fast food. Those who can afford to spend are heading to chains like Chipotle or Shake Shack, which emphasize a commitment to quality, fresh food and treating employees well.
At McDonald's, U.S. same-store sales fell 2.8 percent. And in August McDonald's captured its second smallest share of the fast-food market since 2011, according to an analyst note from Kalinowski. The company named a new U.S. president last month, signaling it may be looking for a way to turn around its struggling performance.
Compounding these issues is the fact that McDonald’s has become a focal point in protests demanding higher pay and better working conditions in the fast-food industry. Hundreds of demonstrators were arrested last week -- some in McDonald’s uniforms -- protesting in cities across the country.