Competitive Watch: McDonald's November Same-Store Sales Dip

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Competitive Watch: McDonald's November Same-Store Sales Dip

12/08/2009
CHICAGO -- McDonald's Corp. said November sales at its established U.S. restaurants fell for the second straight month as quick-service competitors like Burger King and Taco Bell pushed low prices to attract customers, according to a Reuters report.

Sales at U.S. restaurants open at least 13 months fell 0.6 percent, the latest signal that the fast-food sector, which had performed well through most of the recession, is weakening. The decline in U.S. sales at stores open at least 13 months was McDonald's second straight monthly decline and comes less than a week after rival fast-food chain operator Yum Brands Inc. forecast weaker-than-expected fourth-quarter sales, the report stated.

"It does not bode well for spending in the [U.S.] restaurant category," said Tom Forte, an analyst at Telsey Advisory Group. He added high unemployment among 18- to 34-year-olds is weighing on the fast-food industry that McDonald's dominates.

Analysts did note, however, that McDonald's sales were hurt by having one less Saturday and one more Monday in the month than in 2008. The company typically does more business on the weekend, according to the Reuters report.

Fast-food chains such as McDonald's were outperforming other restaurant categories until just recently, when rising unemployment began to take a noticeable bite of sales, particularly at breakfast -- where McDonald's leads the industry, the report said.

McDonald's has been doing better than Wendy's/Arby's Group, Burger King Holdings and other chains in the U.S. by offering a variety of items on its popular Dollar Menu. But its rivals are stepping up with a broad range of inexpensive fare, including a new $1 double cheeseburger from Burger King; a new 99-cent menu from Dunkin Donuts; and a value menu from Yum's Taco Bell that offers items for less than $1.

McDonald's CEO Jim Skinner said the restaurant chain remains "focused on growing market share with a disciplined pricing strategy."

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