The United States (U.S.) restaurant chain McDonald’s reported modest revenue growth in the third quarter, citing weaker results in Europe and China, as well as the impact of armed conflicts in the Middle East. Total revenue for the July-to-September period was 3 percent higher than last year, amounting to 6.87 billion dollars.
However, net profit dropped by the same percentage, sliding to 2.26 billion dollars. Global sales fell by 1.5 percent, the sharpest decline in four years. The biggest drop was recorded in emerging markets, where sales fell by 3.5 percent. Developed markets followed with a 2.1 percent decline, with the company highlighting France and the United Kingdom (UK).
In the U.S., sales remained at the same level as last summer. Customers visited restaurants less frequently in the U.S., Europe, and China, opting for cheaper meals and cooking more at home.
Weaker consumer spending in China and the armed conflicts in the Middle East have challenged the operations of restaurants run by local partners, leading to a decline in sales following a 10.5 percent surge in the same period last year.
The business results also reflect a consumer boycott in the Middle East after McDonald’s announced the distribution of free meals to the Israeli army. Franchise restaurants in some countries with large Muslim communities condemned this move, and the boycott spread from Egypt and Jordan to other regions, including Malaysia.
The company is also bracing for financial fallout from a scandal involving E. coli bacteria found in its Quarter Pounder (known as the Royal Cheese in Europe).
Last week, McDonald’s temporarily halted the sale of Quarter Pounders at a fifth of its 1.400 U.S. restaurants due to the bacterial outbreak, which infected 75 people. At least one person has died as a result of the infection.
McDonald’s restaurants in the U.S. saw sales drop by 6.4 percent on October 23rd compared to last year, 9.1 percent on October 24th, and nearly 10 percent on October 25th.
Photo: Al Jazeera
