McDonald’s missed Wall Street estimates for profit for the first time in two years as more investment to spruce up US restaurants and speed up delivery weighed on the world’s biggest fast-food chain, sending its shares down sharply.
The company has been battling competition in the US as rival fast-food chains challenge its dominance with value meals and a range of new menu items. McDonald’s has also come late to the game in looking at reintroducing chicken sandwiches and beginning to test plant-based burgers, missing out on some of the hype around launches by rivals Burger King and KFC.
“Our gut tells us that McDonald’s was out-competed in the third quarter by Wendy’s and Burger King,” said Cowen analyst Andrew Charles.
In a bid to reverse declining customer traffic and tackle competition, McDonald’s has been remodelling its 14,000 US restaurants.
Sales at US restaurants open for at least 13 months rose 4.8% in the third quarter to the end of September, below the 5.1% growth expected by analysts. Keybanc analyst Eric Gonzalez said the same-store sales number implies that hamburger or sandwich peers are narrowing the gap with McDonald’s.
Globally the company reported better-than-expected comparable sales growth of 5.9% on strong sales in markets such as the UK and France. In Ireland, 41 restaurants are providing a delivery service, said its UK and Ireland chief executive Paul Pomeroy.