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McDonald’s to end monthly sales reporting

McDonald’s to end monthly sales reporting

Company turns focus to reversing sales weakness

McDonald’s Corp. will stop reporting same-store sales on a monthly basis beginning in July, the company said Wednesday, as it takes a quieter path in an effort to reverse its historic sales weakness.

At the Bernstein Research Strategic Decisions Conference, McDonald’s CEO Steve Easterbrook said the company would cease announcing monthly same-store sales results on July 1.

Easterbrook said the company is making its move “to focus our activities around strategic long-term actions we’re taking as part of our plan.” Disclosing same-store sales on a quarterly basis “is consistent with nearly all retailers, and will provide a greater understanding of sales results in the context of the company’s overall performance,” he said.

McDonald’s is the last restaurant company to publicly report monthly same-store sales. No other restaurant company releases monthly sales reports. The last operator to report monthly sales, Starbucks Corp., ended its reports in 2008.

Monthly sales reports are more common in the retail industry. Costco, for instance, reports monthly sales. But that number, too, is declining. Walmart stopped reporting monthly same-store sales in 2009. Target Corp. ended its reports in 2012.

McDonald’s decision comes as it continues to release a steady stream of disappointing monthly sales results. In April, same-store sales fell 0.6 percent worldwide and 2.3 percent in the U.S.

At the conference, Easterbrook offered a few hints as to what the company is doing to improve speed and quality, and reverse current sales trends. McDonald’s will toast buns longer to deliver a hotter sandwich, he said, and will change the way it sears burgers so they are juicier.

Easterbrook also hinted at a value promotion this summer featuring one of the chain’s “most popular items.” Easterbrook suggested that the chain’s failure to effectively replace its Dollar Menu has hurt sales.

“Some of the challenges we’ve had in the U.S. have been somewhat self-inflicted,” he said. “We moved away from the Dollar Menu. We didn’t replace it with significant enough value in the eyes of consumers.”

Chief administrative officer Pete Bensen added that some items, like the chicken sandwich, were removed from the Dollar Menu, which “eroded entry-level value.”

The U.S. represents 40 percent of McDonald’s operating income, so turning around sales is vital to the Oak Brook, Ill.-based chain.

“The U.S. is a burning priority,” Bensen said. “We’re working hard to stabilize and reverse guest count declines.”

Easterbrook noted the company’s reorganization of its domestic business, which gives regions more say in menu choices and marketing. He highlighted lobster rolls in Massachusetts and pressure-cooked chicken in Atlanta.

“Things previously held back by corporate are now being championed by different regions,” he said.

McDonald’s is testing a simplified menu board that cuts the number of items listed in half. It also plans to add side-by-side drive thrus in 500 restaurants in the coming months, and has started a new training program that has reduced the number of order accuracy complaints by a third.

Early results from a delivery test in New York have been positive, and the company is getting repeat business from customers who order more food. The potential for delivery could be big: Easterbrook said that in Asia, delivery is well established, and is a $1 billion business there.

As for its all-day breakfast test in San Diego, it’s too early to determine the impact.

“That’s the No. 1 request we’ve received from customers, is breakfast items available throughout the day,” Easterbrook said.

Easterbrook also discussed the company’s turnaround plan and its reorganization, which was announced early this month, and defended the potential for the plan to fix sales over the long-term. He also gave clues as to how $300 million in general and administrative cuts will affect the organization, and how it will simplify operations.

For instance, he noted that the presidents responsible for McDonald’s in Europe, Asia and Africa oversee 40 markets and have staffs of up to 200 each. As president of McDonald’s five “International Lead Markets,” of Australia, Canada, France, Germany and the U.K., market president Doug Goare will have a staff of two, Easterbrook said.

“The reality is, those five lead markets are all very well resourced, with great leadership,” Easterbrook said. “I don’t think they need an entire tier on top of them.”

Goare, who remains president of McDonald’s Europe until July 1, will need to visit five countries instead of 40, meaning less travel time and more time in the markets, even if one of them — Australia — is a world away from the others.

It may not seem significant outside McDonald’s, Easterbrook said, “but it’s incredibly liberating inside the business.”

This story has been revised to reflect the following update:

Update: May 27, 2015  This story has been updated to remove details about an upcoming summer promotion.

Contact Jonathan Maze at [email protected].
Follow him on Twitter: @jonathanmaze

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