Recession/Depression good for peoples waistlines

Discussion in 'Economics' started by Trexticle, Dec 9, 2009.

  1. ap
    McDonald's sales take hit from US joblessness
    McDonald's US sales decline deepens as joblessness, competition catch up to burger chain

    * By Ashley M. Heher, AP Retail Writer
    * On 4:57 pm EST, Tuesday December 8, 2009


    o McdonaldS Corp.

    CHICAGO (AP) -- The supersized recession that was a boon for business last year caught up further with McDonald's Corp. in November, as high unemployment ate into sales.
    AP - FILE - In this file photo taken April 20, 2009, a neon sign reminds patrons at a McDonald's ...

    AP - FILE - In this file photo taken April 20, 2009, a neon sign reminds patrons at a McDonald's ...
    Related Quotes
    Symbol Price Change
    MCD 60.96 +0.35

    While the world's largest burger chain is still faring better than its competitors, who've increasingly been pushing value menus and discounts of their own, the restaurant's fortunes likely won't improve unless the U.S. economy does.

    "I think ultimately, we'll need job growth to get things turned around to get back in the positive territory," said Morningstar restaurant analyst R.J. Hottovy.

    On Tuesday, McDonald's said sales at restaurants open at least a year fell 0.6 percent in the U.S. It was the second consecutive monthly decline for the measure, an important indicator of a restaurant chain's health, and a steeper fall than October's 0.1 percent.

    November's overseas results were better but still mixed, helped by a softening dollar that translated foreign revenue into more dollars. Around the globe, sales in locations open at least a year rose 0.7 percent.

    Because of its size and its ability to trounce competitors with its increasingly popular dollar menu, McDonald's was one of the early beneficiaries of the recession as diners traded down from pricier restaurants. In fact, last November, sales in locations open a year climbed 4.5 percent in the U.S. and 7.7 globally.

    But earlier this fall, McDonald's cautioned it wasn't immune to the recession, either, and in October, the U.S. figure fell 0.1 percent.

    Tuesday's results were only the fourth U.S. decrease in 6 1/2 years.

    The results come as McDonald's also faces increased competition from rivals trumpeting their own deeply discounted menus. Among them: Taco Bell's value menu that begins with items for 79 cents, and Wendy's $2.99 combos. Burger King has also heavily pushed a $1 double cheeseburger that it touts as being a bigger and better value than McDonald's $1 McDouble.

    "It appears that after nearly six years of consistent gains, further increases in U.S. comps will be more labored," Standard & Poor's restaurant analyst Mark Basham said in a research note.

    That's because until the U.S. unemployment rate -- which was 10 percent in November -- recovers significantly, McDonald's customers are less likely to visit the chain -- picking up coffee and a McMuffin for breakfast, or dashing in for a Big Mac for lunch with co-workers.

    In Europe, sales in locations open at least a year rose 2.5 percent, thanks to stronger business in the U.K. and France. But the figures were still short of forecasts and were the second-worst figures from the continent this year, said Janney Capital Markets analyst Mark Kalinowski.

    "McDonald's did not provide much in the way of explanation for the lower-than-anticipated European (figure), suggesting to us that the region may remain under a cloud of uncertainty," Kalinowski told investors in a research note.

    Sales in locations open for at least a year in the Middle East, Africa and Asia/Pacific dropped 1 percent. Last year, the figure rose 13.2 percent in the region.

    Meanwhile, systemwide sales -- a figured based on results at company owned restaurants as well as those operated by franchise owners -- climbed 10.1 percent. Adjusting for currency fluctuations, systemwide sales were up 2.3 percent.

    The company, based in Oak Brook, Ill., runs more than 32,000 restaurants in more than 100 countries.

    Its shares fell $1.32, or 2.1 percent, to close at $60.61 Tuesday.

    AP Retail Writer Michelle Chapman contributed to this report from New York.
  2. usually in a recession macdonalds does well because customers go there instead of better places. this would indicate the recession is worse and indicative of depression. customers are not just changing their habits for less expense they are completely cutting it off. bad sign indeed if you ask me.
  3. S2007S


    Speaking of Mcdonalds, I went there the other day, now I never eat this food, haven't in many many years....I would say at least 10 years, however I went there and ordered 2 meals, only one was an extra value meal and was totally taken by surprise when they said $14.25. I remember when the meals were $2 AND $3 bucks....

    Aside from not being a healthy food its pretty expensive for the quality you get.

    Looks like I wont be going back for another decade or two.....
  4. i think food in general is rising in price.
  5. what did you order??:confused: :confused: :confused:
  6. ElCubano


    10 piece nuggets meal is $6.83....That's crazy. My son loves that crap. ;o).
  7. the1


    I went to Applebee's for dinner over the weekend, which I'm guessing is a notch above MCD's, and there were three tables occupied -- three. I've never seen a restaurant so dead.

  8. how old is your son.
  9. Construction workers eat at McDonald's. Most construction workers are sitting at home collecting unemployment, which works pretty good for a couple of years, and eating bologna sandwiches. I would be interested to see how beer and cigarette sales are doing. People can always find money fore beer and cigarettes, even if it means not paying the child support.