Off the Menu: McDonald's US Sales Unexpectedly Decline 4.6%

Global fast food sales are down 2.2%, their sixth consecutive monthly fall. McDonald's leads the way with a 4.6% sales decline in November, more than double the expected decline.

In its report Off the Menu, the BBC notes that like-for-like sales at McDonald's have not increased since October 2013, as smaller rivals eroded its market share.

Meanwhile, Mexican food chain Chipotle reported a 20% rise in like-for-like sales for the three months to September 30 - the third quarter of double-digit increases.

More to it Than Competition

Some blame it on the strong US dollar, but that only applies to foreign sales. People heading elsewhere? Yes, but it's easy to grow faster when you are much smaller. I blame it primarily on the cost (value if you prefer that term).

McDonald's Prices

A check of Fast Food Menu Prices shows that a Bacon Cheese Quarter Pounder Meal will set you back $6.60 in Illinois. Add in 10% sales tax for some Cook County locations and the cost per person is $7.26.

If there's two of you, the cost hits nearly $15. Care to supersize that? For a family of four?

Then there's the wait.

Build-Your-Own

It's difficult without an extremely long wait to "have it your way" at McDonald's.

My question: How is it that you can get it whatever way you want at Wendy's and Burger King without a wait, but you cannot at McDonald's?

That's long been a mystery to me. At any rate, the Consumerist just reported McDonald’s Bringing Build-Your-Own Burger Option To 2,000 Locations.

Here's the catch:

"Don’t expect comparable menu prices for your bespoke burger. At one location visited by USA Today, a customized burger with medium fries and a drink cost $8.29, while the pre-made burger meal only comes in at $5 on the regular menu."

Is that supposed to increase sales or drive everyone away?

"One of the common complaints from McDonald’s franchisees is that their corporate bosses have been forcing new and expensive menu options on them. If the company decides to keep rolling out the Create Your Taste option at more eateries, you can expect some push-back from franchisees with smaller stores who don’t have the space for the additional ingredients or room for ordering kiosks."

Breakfast

The only time I ever eat at McDonald's is for breakfast, and even then, only when I am out of town. Moreover, at 10:00 AM sharp (10:30 in some locations), McDonald's cuts off the breakfast menu. It's not often I am up and about and finished blogging by then.

Enter the Unions

Unions demand $15 an hour. They claim they cannot live on $7.25. I sympathize, but who's to blame for that?

It's not the stores. Sales are already in decline. Make the minimum wage $15 an hour and what is that burger going to cost?

Besides, most McDonald's stores are franchises, semi-independently run (with big brother Ronald making sure franchisees obey the necessary rules).

I suspect many locations are barely profitable, or profitable only because of cheap family labor.

Unions claim higher minimum wages will not cost jobs. The claim defies common sense. If unions want to blame someone, they ought to picket the Fed for inane inflation policy, not McDonalds.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com