Sales of McDonald’s all-day breakfast menu could be on the slide as US same-store sales slip
Shares in global fast food giant McDonald's have slipped by more than three per cent in the pre-market today as investors fear the all-day breakfast boost may coming to an end.
McDonald's posted earnings of $1.25 per share on sales down by four per cent to $6.26bn (£4.7bn), falling short of a Thomson Reuters analyst poll that expected earnings of $1.38 a share on revenues of $6.27bn.
Meanwhile US same-store sales also missed expectations, rising just 1.8 per cent, and globally the company recorded a same-store sales increase of 3.1 per cent. Analysts had expected growth of 3.6 per cent.
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In October last year McDonald's brought in an all-day breakfast menu in the US to great fanfare.
The move succeeded in pushing up sales as it fast food pioneer battles against growing competition from the likes of Chipotle, Shake Shack, and Five Guys.
Customers could have had their fill though, after the fourth consecutive quarter of positive same-store sales growth across all business segments.
McDonald's isn't the only fast food chain to suffer recently however. KFC owner Yum Brands, Taco Bell and Pizza Hut have blamed weakening consumer confidence for softer sales.
Jefferies analyst Andy Barish said:
We believe the industry has at least 18 months of challenges ahead in terms of softer [same-store sales growth] and higher labour costs because of capacity growth and labour tightness, a year after the stock peak in summer '15.
Investors are now keenly awaiting what else McDonald's is cooking up after British chief executive Steve Easterbrook – who joined the company in March last year – moved to paring down the menu and become more transparent about how its food is made.
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Easterbrook said in a statement following the results:
At McDonald's, we are focused on meeting our customers' needs for high quality, affordable food and beverage choices.
Our second quarter performance, which marks our fourth consecutive quarter of positive comparable sales across all business segments, provides a clear indication that customers are responding to the steps we're taking to deliver the menu and value options they want at the convenience of McDonald's.