The McRib didn't save Mickey D's. Source: McDonald's.
Yes, McDonald's (MCD +1.55%) investors: it is that bad. The world's largest burger chain kicked off the week with another horrendous monthly report.
Global comparable-store sales declined 2.2% in November relative to the year before. Things were even worse closer to home, where McDonald's checked in with a 4.6% plunge in U.S. comps. Domestic comparable-store sales have fallen in 12 of the past 13 months and through four consecutive quarters.
Things have been bad at Mickey D's for some time, but not this bad. The 4.6% slide in stateside store-level sales is the worst monthly showing in more than 11 years. That's pretty darn significant, and it's also as alarming as it is surprising. After all, McDonald's had several factors that could have pointed to a bounce last month.
- The Monopoly promotion ended on Oct. 27, but winning food prizes could be redeemed through mid-November. This should have resulted in a spike in traffic, especially relative to last year when the popular annual event took place in the summer.
- The regional rollout of the McRib began late in October, giving fans of the cult fave item a good reason to trek out to the Golden Arches.
- The nasty string of negative comps began in November 2013. It should have been easier to post year-over-year growth relative to the negative month a year ago.
- Most trends point to a welcome climate for the restaurant industry. The economy is improving, and lower gas prices make it easier to justify driving out to eat or snaking through a drive-thru lane.
McDonald's has fallen out of favor. Other burger chains are holding up relatively better. Does McDonald's have a plan to get out of this mess? Absolutely. Does it sound like something that it has been repeating for months to no avail? Absolutely.
Monday's gloomy report concludes with McDonald's tackling the situation by revamping its marketing approach, simplifying its menu, and introducing a new organizational structure. That sounds like the right approach, but it's exactly the same three things the burger flipper pointed to a month ago -- and the previous month.
In each of the five months before that, the rallying cry was a promise for initiatives to improve service, value, and menu. There's always a plan at the struggling fast-food giant. It's just not a plan that is working.
If there was an easy fix we would have seen it by now, and CEO Donald Thompson would not be on the hot seat. Unfortunately, McDonald's is at the point where it can't go back. It's a tarnished brand in terms of quality at a time when better burger and fast-casual operators are happily grabbing McDefectors. We're too far gone from the point where a single menu addition will bring patrons scrambling back into the arched clutches of McDonald's, and anyone who has walked into one of the restaurants lately to see its growing array of choices knows simplification is merely lip service.
If all of the tailwinds working in the chain's favor couldn't deliver a respectable November, don't hold out for a bounce in December.
