What’s Eating McDonald’s

BusinessWeek:

You’d think McDonald’s would be a can’t-miss recession play for global investors. Yet shares of the fast-food giant are flat in 2009 during one of the most dramatic stock rallies in history.
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While the burger giant keeps growing overseas, same-store sales in the U.S., where McDonald’s generates half its operating profits, dipped 0.1% in October and are likely to stay weak for the rest of the year. In response, McDonald’s will soon launch a dollar breakfast menu and add smoothies to its lineup.

The problem: Rising unemployment, particularly among men aged 18 to 35, has slowed customer traffic. According to data tracker NPD Group, visits to fast-food restaurants declined 3% over the summer, the worst performance in decades. Traffic is notably weaker during the morning commuting hours, when McDonald’s makes 25% of its sales. “That has really become a major negative for them,” says Ronald N. Paul, president of restaurant consultancy Technomic. Moreover, families increasingly are eating at home: NPD says Americans will average 202 meals at restaurants in 2009, down from 211 in 2001.

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