McDonald’s Middle East region July sales hit by Ramadan

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View of a McDonald’s restaurant in Jumeirah neighbourhood of Dubai, UAE. Photo – gubbiofarabia.tumblr.com

McDonald’s global same-store sales were flat in July as the fast-food chain posted declining sales across all three of its regions. It cited a negative impact from the shift in timing of Ramadan as reason for dip in Middle East sales.

The corporation said it expected global sales at restaurants that have been open at least 13 months to be positive in July, but below the second quarter. Meanwhile, analysts had projected a 2.3% increase, according to Consensus Metrix.

The Asia/Pacific, Middle East and Africa region posted a 1.5% decrease, while analysts’ projected a 1.4% rise. Positive results in Australia were outweighed by ongoing weakness in Japan. Late last month, McDonald’s said it had expected July same-restaurant sales to rise, but not as much as the 3.7% gain reported for the second quarter. Expectations were low ahead of the results.

McDonald’s has historically been able to boost guest traffic and sales faster than most of its competitors with its increasingly diverse menu–ranging from value-price offerings to higher-margin products like blended-ice drinks – and its growing global operations. But the hamburger chain has previously warned the global economic climate remains challenging with varying degrees of consumer confidence, economic pressures and inflationary costs.

“We are committed to driving the business over the long-term by executing our proven Plan to Win strategy, despite softer global comparable sales in July,” Chief executive Don Thompson said.

Same-store sales in the US edged down 0.1%, missing the 2.2% growth estimate, as the promotional activity didn’t offset the effects of the sluggish economy and last year’s launch of the Mango Pineapple smoothie.

In Europe, same-store sales shrank 0.6%, below Consensus Metrix’s forecast for a 2.4% climb. McDonald’s said strong results in the UK and Russia were more than offset by weaker performance in Germany and several Southern European markets amidst an increasingly difficult environment.

The global fast food chain, often criticised for its unhealthy meals, is facing stiffer competition from newcomers such as Panera Bread Co. and old rivals such as Burger King Worldwide Inc. and Wendy’s Co., which are revamping their menus and rebranding to win market share.

And last month, McDonald’s said its net income fell 4% in the second quarter as unfavorable currency exchange rates and high costs ate into profits.

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