McDonald's (NYSE:MCD) has been having all sorts of problems over the past couple of years. Sales at its stores have been falling, particularly in Asia, where food safety issues have tarnished the brand. The company admitted that its menu had become overly complicated, slowing down service and hurting the customer experience. Former CEO Don Thompson, after only a few years on the job, was pushed out as the company struggled to reverse troubling trends. And fast casual chains like Chipotle (NYSE:CMG) are increasingly eating McDonald's lunch, stealing away younger, more health-conscious customers.

This all looks extremely dire for McDonald's. But here's something you probably didn't know: even with all of its problems, the average McDonald's restaurant generates higher sales than the average Chipotle location.


Annual sales per store


$2.42 million


$2.30 million

Source: McDonald's and Chipotle

How can this be? Chipotle is extremely popular, posting industry-leading comparable-store sales growth in recent years, while McDonald's has been floundering. It turns out that it's far too early to proclaim that McDonald's is doomed, and the company's current problems are, at least so far, just a bump in the road. Whether McDonald's can turn things around will be up to the new management team, but the problems the company is facing aren't as serious as they seem.

Falling sales aren't as bad as they seem
Declining sales are never a good thing, but the lackluster comparable-store sales growth that McDonald's has been reporting over the past couple of years needs to be put into context. Here's how the average sales per store, including both company-operated stores and franchised locations, has evolved over the past fifteen years:

Source: McDonald's 10-Ks 

McDonald's made huge gains from 2002 through 2011, very nearly doubling sales-per-store over that period. Relative to this gain, the decline over the past two years isn't very large at all.

This doesn't mean that it's not a problem. But the last couple of years have not been as disastrous as the comparable-store sales declines reported by McDonald's suggests. McDonald's remains the undisputed leader in fast food, selling far more per restaurant than its peers. The average Wendy's restaurant generated just $1.51 million in sales during 2013, for example. Even after two difficult years, McDonald's remains far in the lead.

Asia is the biggest problem
During January, McDonald's managed to post positive comparable-store sales growth in both the United States and Europe. Asia was a different story, however, with comparable-store sales falling 12.6%. A perception problem in Japan due to various food safety issues during 2014 led the operator of McDonald's Japan restaurants to post its first annual loss in 11 years.

Sales in China were also hurt by food safety scandals, and McDonald's is struggling to get consumers to trust the brand. Asia is an important market for McDonald's, with the APMEA region, which also includes the Middle East and Africa, generating 23% of McDonald's total revenue in 2014.

The extremely poor performance in Asia is dragging down the performance of the entire company, but the stabilization of sales in the U.S. and Europe during the past couple of months represent real progress. Getting consumers to trust McDonald's in Asia after the raft of scandals will take time, but the company is already making progress in its other major markets.

McDonald's isn't falling apart
At this point, there's no reason to believe that McDonald's can't stabilize its business and return to growth. McDonald's remains one of the best performing restaurant companies in the world, selling more per store than even the ultra-popular Chipotle.

With new management and a real effort to simplify the menu, McDonald's is taking the steps necessary to right the ship. Asia will likely remain a problem for a while, but it's a fixable problem. McDonald's certainly isn't out of the woods, and management will need to execute in order to prevent further sales declines. But McDonald's is in much better shape than many people seem to think.