The Dollar Menu failed to lift sales for fast food giant McDonald’s , though the company still managed to eke out a higher profit for its first quarter.
The company announced on Friday that an important sales measure lost one percent during the first quarter. The world’s largest hamburger joint added that the number is expected to dip again in April.
The announcement was the first of its kind for McDonald’s in a decade for sales. It was the first decline the has seen since 2003 for sales at restaurants open at least 13 months. It also served to underscore the troubles the fast food chain has been facing.
Wendy’s and Burger King have stepped up their marketing campaigns in an effort to take business away from their rival. McDonald’s has responded with marketing campaigns that star their Dollar Menu value deals. But despite the effort, the company has not been able to hold onto customers.
Peter Benson, McDonald’s chief financial officer , stated, “The battle for market share has become so critical for the long-term health of business, we’re willing to sacrifice that margin.” But despite sacrificing by promoting cheaper prices than the rest of the industry, the Dollar Menu has failed.
There are also signs that the Dollar Menu sacrifices aren’t sitting very well with the company’s independent franchises who operate their own restaurants. Janney Capital Markets released a survey this week that found a sampling of 25 US franchises who operate 180 restaurants related their relations with the company below their historic levels.
Some of those franchises voiced their displeasure with excessive coupons and discounts. The strategy of touting the McDonald’s Dollar Menu has also worried some analysts, who believe it will eat into the chain’s profit margins. The McDonald’s value meals and deals have been a long-held staple of the chain. But McDonald’s is one of the few to keep a large number of items under $1, while other fast food restaurants have bumped up their prices.
Along with the Dollar Menu failing the company in the United States, McDonald’s also saw their global sales drop by 1.1 percent in Europe — the company’s largest region by sales.
[Image via Nicholas Wang ]