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McDonald's Same-Store Sales Fall: Was It the Weather or the Competition?

By Erin Kennedy and Taylor Muckerman – Mar 10, 2014 at 1:14PM

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Same-store sales for McDonald's fell last month, and like many companies this winter, one reason cited was the weather. But could McDonald's problems be bigger than the snow?

McDonald's (MCD 0.58%) reported a same-store sales drop for the month of February, which has caused concern among investors. The company cited both competition and the harsh winter weather this year as reasons for the decline, particularly in the North American market. In this video from Monday's Stock of the Day, however, Motley Fool analyst Taylor Muckerman expresses his doubts that the weather can really be blamed here and sees competition as a much more damaging factor. While McDonald's thrived during tighter financial times just after the recession, Taylor notes that the fast-casual dining space now has a multitude of options that are just as fast as McDonald's, but healthier, tastier, and not too much more expensive.

One of the bigger questions may be where McDonald's is going to find growth from here. While the company is still doing well in Europe, that was the only major geographical region where the company saw growth. The U.S. was once the bread and butter of the company and is now showing a continuing trend of decline. While Taylor notes that continued growth in Europe could be a driver for the company going forward, the slowing performance in the world's other markets is definitely a concern. While the stock is stable and pays a nice dividend, it has lagged the S&P significantly over the last year, and Taylor isn't a buyer of McDonald's today.

Erin Kennedy and Taylor Muckerman have no position in any stocks mentioned. The Motley Fool recommends and owns shares of McDonald's. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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