McDonald's Turnaround Plan Hasn't Led to Positive Earnings Yet
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McDonald's turnaround plan is in effect. Now it's time to start answering the big question: Will it work?
After seven straight quarters of declines, the burger chain says it expects positive global comparative sales in the third quarter due both to its organizational changes and a predicted sales recovery in China following last year's supplier issues.
"We have made meaningful progress since announcing the initial steps of McDonald's turnaround plan in early May," McDonald's CEO Steve Easterbrook said in a statement released Thursday. "While our second quarter results were disappointing, we are seeing early signs of momentum."
In the U.S., featured products and promotions failed to lead to positive guest traffic during the second quarter. The company saw a worse-than-expected 2 percent decline in U.S. same-store sales, and a 0.7 percent drop globally.
The company's quarterly profit fell to $1.2 billion from $1.39 billion a year earlier, and revenue fell 10 percent, but both results topped analysts' expectations.
Going forward, McDonald's says it plans to repair sales in the U.S. in part through continuing to test all-day breakfast in select markets and increase localized offerings, such as the recent feature of the McLobster in the Boston area. Simplification, both of menu offerings and employee procedures, is still a key part of the turnaround plan. The company is also focused on efforts that are, in the words of Easterbrook, "not headline grabbing moves," such as better marketing support and enhanced customer service.