McDonald’s McTricks Aren’t Working
Turns out warm buns aren’t the solution to McDonald’s financial woes.
The burger giant announced Thursday that its sales slide continued in the second quarter, with same store sales falling 0.7 percent globally and by 2 percent in the U.S. Quarterly revenues dropped 10 percent to $6.5 billion, though without currency effects from a strong dollar they would have climbed 1 percent.
The results were good enough to top Wall Street’s expectations, but they showed again just how far McDonald’s has to go to win back customers.
Related: The 11 Worst Fast Food Restaurants in America
The fast food chain blamed the admittedly “disappointing” results on the failure of its products and promotions to draw customers to its stores as anticipated.
New CEO Steve Easterbrook, who took over in March, has promised to revamp the restaurant chain and improve sales by catering to consumers who prefer fresh, high quality food.
McDonald’s continues to try a variety of promotions and menu changes to win back diners. It recently started offering a double cheeseburger and fries for $2.50 as a summer deal and rolled out an “artisan grilled chicken sandwich.” It has also, among other things, enlarged its quarter pounder, tested a new breakfast bowl full of kale, rolled out flavored hot coffee in some locations and even tested a lobster roll in New England restaurants. And it upped the toasting time for its hamburger buns by 5 seconds.
So far, though, the new deals and menu options have failed to entice diners.
Related: 9 Ways McDonald’s Wants to Get You Excited About Its Food Again
Easterbrook did acknowledge that changing McDonalds’ image would take time, but he said Thursday that the company is “seeing early signs of momentum.”
The company will begin to offer all-day breakfast, which already accounts for 25 percent of the company’s sales. And it is continuing to simplify its menu options to lower costs.
Analysts wonder if such changes will be enough to boost consumer appetites for McDonald’s and how the company is going to reposition its brand. As Thursday earnings report made clear, introducing a younger, hip hamburglar isn’t going to cut it.
Chart of the Day: Why US Fertility Rates Are Falling
U.S. fertility rates have fallen to record lows for two straight years. “Because the fertility rate subtly shapes many major issues of the day — including immigration, education, housing, the labor supply, the social safety net and support for working families — there’s a lot of concern about why today’s young adults aren’t having as many children,” Claire Cain Miller explains at The New York Times’ Upshot. “So we asked them.”
Here are some results of the Times’ survey, conducted with Morning Consult. Read the full Times story for more details.
A Record Low 47% of US Adults Say They're 'Extremely Proud' to Be American
Gallup says that, for the first time in the 18 years it’s been asking U.S. adults how proud they are to be Americans, fewer than half say they are "extremely proud." Just 47 percent now say they’re extremely proud, down from 70 percent in 2003.
Another 25 percent say they’re “very proud” — but the combined 72 percent who say they’re extremely or very proud is also the lowest Gallup has recorded. Pride levels among liberals and Democrats have plunged since 2017. Overall, 74 percent of Republicans and just 32 percent of Democrats call themselves “extremely proud” to be American.
Pfizer Has Raised Prices on 100 of Its Products
Weeks after President Trump said that drugmakers were about to implement “voluntary massive drops in prices” — reductions that have yet to materialize — Pfizer has raised prices on 100 of its products, The Financial Times’s David Crow reports:
“The increases were effective as of July 1 and in most cases were more than 9 per cent — well above the rate of inflation in the US, which is running at about 2 per cent. … Pfizer, the largest standalone drugmaker in the US, did decrease the prices of five products by between 16 per cent and 44 per cent, according to the figures.”
Crow notes that Pfizer also raised prices on many of its medicines in January, meaning that some prices have been hiked by nearly 20 percent this year. The drugmaker said that it was only changing prices on 10 percent of its medicines and that list prices did not reflect what most patients or insurers actually paid. The net price increase after rebates and discounts was expected to be in the “low single digits,” the company told the FT.
Chart of the Day: Pass-Through Tax Deductions Made Easy
The Republican tax overhaul was supposed to simplify the tax code, but most experts say it fell well short of the goal. Martin Sullivan, chief economist at Tax Analysts, tweeted out a chart of the analysis required to determine whether income qualifies for the passthrough tax deduction of 20 percent, and as you’ll see, it’s anything but simple.
A Conservative Bashes GOP Dysfunction on Spending Cuts
Brian Riedl, a senior fellow at the conservative Manhattan Institute, offers a blistering critique of congressional Republican’s problems cutting spending:
Since the Republicans took the House in 2011, nearly every annual budget blueprint has promised to balance the budget within a decade with anywhere from $5 trillion to $8 trillion in spending cuts. And yet, you may have noticed, the budget has not moved towards balance. This is because the budget merely sets a broad fiscal goal. To actually cut spending, Congress must follow up with specific legislation to reform Medicare, Medicaid, and all the other targeted programs. In reality, most lawmakers who pass these budgets have no intention whatsoever of cutting this spending. As soon as the budget is passed, the targets are forgotten. The spending-cut legislation is never even drafted, much less voted on.
The annual budget exercise is thus a cynical exercise in symbolism. Congress calculates how much spending must be cut over ten years to balance the budget. Then they pass legislation setting a goal of cutting that amount. Then they move on to other business. It’s like a baseball team announcing that they voted to win the next World Series, and then not showing up to play the season.
Read the full piece at National Review.