McDonald’s Corporation (NYSE:MCD)’s CEO, Steve Easterbrook, said that he could see signs of momentum and expects sales to rebound in the third quarter. He expressed his disappointment over the sales drop of 10% in the second quarter though it topped the Street expectations. As a result, the restaurant firm also suffered a fall in its earnings, which also came in above the predictions. Its same store sales witnessed 0.7% fall in the second quarter.
Turnaround Plan
McDonald’s Corporation (NYSE:MCD)’s CEO has launched its turnaround plan in May following the exit of its former CEO, Don Thomson, in January. The new CEO has been stressing to make big changes to encourage people to eat at the Golden Arches. However, the customers and the experts wanted the restaurant firm to provide details on how it was going to spruce up its menu.
As part of its turnaround plan, the company announced a lot of marketing phrases such as the ‘modern progressive burger company’. However, that left the people wondering to ask where was the beef? It appears that the people in the Americas are not happy with the food or the menu, which will be important to get back on track.
Provides More Details
McDonald’s Corporation (NYSE:MCD)’s Easterbrook also provided some additional details during the conference call on its plan to win back customers. He pointed out that several restaurants executed a new cooking method like the toasting the hamburger buns longer. The hope lies in hotter and juicier sandwiches. However, there was no promise of overnight miracles.
The CEO said that there was no silver bullet. He said that a single move could not turn the business. He also pointed out that the decline was there for close to three years. McDonald’s Corporation (NYSE:MCD) focus is to rejuvenate its core menu. Though there will be new product launches that will not be the main priority. He said that customers could see regional menu items like popular lobster roll in Boston.
McDonald’s Corporation, incorporated on December 21, 1964, operates and franchises McDonald’s restaurants. McDonald’s global system comprises both Company-owned and franchised restaurants. The Company manages its business as distinct geographic segments: the United States (U.S.); Europe, and Asia/Pacific, Middle East and Africa (APMEA). The Company’s operations in Canada and Latin America, as well as its Corporate activities are reported under Other Countries & Corporate. The Company’s restaurants offer a substantially uniform menu, although there are geographic variations to suit local preferences and tastes. Its menu includes hamburgers and cheeseburgers, Big Mac, Quarter Pounder with Cheese, Filet-O-Fish, several chicken sandwiches, Chicken McNuggets, wraps, French fries, salads, oatmeal, shakes, McFlurry desserts, sundaes, soft serve cones, pies, soft drinks, coffee, McCafe beverages and other beverages. In addition, the restaurants sell a variety of other products during limited-time promotions. The Company’s restaurants in the United States and many international markets offer a full or limited breakfast menu. Breakfast offerings may include Egg McMuffin, Sausage McMuffin with Egg, McGriddles, biscuit and bagel sandwiches, and hotcakes.
McDonald’s franchised restaurants are owned and operated under one of the following structures: conventional franchise, developmental license or affiliate. Under a conventional franchise arrangement, the Company owns the land and building or secures a long-term lease for the restaurant location and the franchisee pays for equipment, signs, seating and decor. Franchisees are also responsible for reinvesting capital in their businesses over time. The Company’s typical franchise term is 20 years. Conventional franchisees contribute to the Company’s revenue through the payment of rent and royalties -based upon a percent of sales, with specified minimum rent payments, along with initial fees paid upon the opening of a new restaurant or grant of a new franchise.
Under a developmental license arrangement, licensees provide capital for the entire business, including the real estate interest. The Company does not invest any capital under a developmental license arrangement. The Company receives a royalty -based upon a percent of sales , as well as initial fees upon the opening of a new restaurant or grant of a new license. This structure is used in over 70 countries with a total of approximately 5,228 restaurants. The largest developmental licensee operates approximately 2,100 restaurants in 19 countries in Latin America and the Caribbean.
The Company also has an equity investment in foreign affiliated markets, referred to as Affiliates. In these markets, the Company receives a royalty -based on a percent of sales. The largest of these affiliates is Japan, where there are nearly 3,100 restaurants.
The post McDonald’s Corporation (MCD) CEO Sees Turnaround Of Sales Fortunes In 3Q appeared first on Live Trading News.