Over the past few years, I'm not sure anything in the fast-food sector garnered as much attention as McDonald's decision to begin offering all-day breakfast. Long awaited by many of the brand's fans, and spear-headed by social media requests, the company began selling a limited selection of its breakfast menu throughout the afternoon and evening hours in October 2015, and even expanded its selection in 2016.
It seems that the popularity of the offerings has caused some headaches for same-store sales. McDonald's reported a 1.3% decline in same-store sales at U.S. locations in the fourth quarter 2016, faced with a tough comparison to last year's all-day breakfast launch, reported MarketWatch. According to CEO Steve Easterbrook, McDonald's expects similar challenges going forward:
"As we begin the first quarter of 2017, we are mindful of the comparison we face against first quarter 2016 results, which benefited from [the extra day from] leap year, favorable weather and continued momentum from all-day breakfast in the U.S."
However, it wasn't all bad news. In the wake of the company's decision to sell a majority stake of it's China business to CITIC and the Carlyle Group in a $2.1 billion deal, the company's China units showed growth: fourth-quarter same-store sales in the company's high-growth segment (which includes Japan and China) increased 4.7%. Its foundational markets specifically posted an 11.1% jump in same-store sales.
The company is looking to grow in Europe, as well, with a specific focus on Russia. It is opening new stores in what it considers a "high growth" market. When the restaurant first came to Russia, 80% of its ingredients were imported, but now 85% are grown in the country. The company's expansion in Siberia is in partnership with a local franchisee, minimizing risk for the company, reported The Wall Street Journal.
Turning back to the U.S., the Chicago Plan Commission approved plans for McDonald's to build a "vendor village" at its future headquarters that would be leased to other companies doing business with McDonald's. The approval is for a 224,000-sq. ft., $47.2 million development on the site, reported Crain's Chicago Business.
The company is also hoping the introduction of a few new food items will help to boost sales. Specifically, the company launched the petite Mac Jr. and the supersized Grand Mac nationwide, reported Chicago Tribune. Although not revolutionary, the new offerings are on par with Wendy's and Burger King which offer differentiated versions of their signature burgers.
According to Foodbeast, the company's offices received a mysterious box the week of Jan. 11. The box contained a napkin with the words "BIG THINGS ARE HAPPENING AT McDONALD'S." Beneath the message, the date of Jan. 26 was printed. The writers at Foodbeast opined on the possibilities, including the potential launches of Deluxe Breakfast Platters, Chicken McGriddles, Pork Katsu sandwiches and even waffle fries.
Although we'll need to wait a few days, you can be sure that McDonald's still has ambitions with the turn-around plans instituted by Steve Easterbrook. And you can be sure that we will cover whatever news comes to light in Today in Food and the Food Institute Blog.
Chris is a business writer and market analyst that focuses on the Markets, Legal and Washington sections of the Food Institute Report. In addition, he assists in compiling data for various Food Institute publications throughout the year. He invites you to contact him via email at email@example.com to talk about anything food-related.
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