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McDonald’s plans ‘Fish McBites’ to boost sales

DThompson

Don Thompson

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Updated: February 25, 2013 12:34PM



McDonald’s Corp. warned Wednesday that its global sales will slow again in January, just two months after the Oak Brook-based fast-food giant ousted its U.S. business president, leading analysts to call for a renewed focus on cheap eats and rebuilding their customers’ loyalty.

Though McDonald’s posted a higher profit in its fourth quarter of $1.4 billion, or $1.38 a share — up 1.4 percent from a year ago — its all-important sales numbers failed to impress, with a 0.3 percent increase in the United States, a 0.6 percent decline in Europe and a 1.7 percent decrease in the Asia-Pacific/Mideast/Africa region.

CEO Don Thompson told analysts the company is renewing its focus on its “Dollar” menu and boosting advertising for it, introducing new products such as snack-sized “Fish McBites” and continuing to set up franchised restaurants in China. Other new items will include beverages, beef sandwiches, chicken offerings and breakfast eats that have tested well in select markets, Thompson said. Chicken wings are being tested in the Chicago market now.

McDonald’s will choose for its Dollar menu only proven profit producers, such as the Grilled Onion Cheddar Burger, and has no plans to build new restaurants that cannot boost the bottom line.

But customers appear to be tightening their belts, too.

Thompson cautioned that bad weather and higher payroll taxes may cause customers to clamp down on spending in January.

Analysts say Wall Street is willing to see how Thompson handles McDonald’s emboldened rivals and menu-pricing and product rollout fumbles before they criticize him.

Neil Stern, retail analyst and senior partner at Chicago’s McMillan Doolittle consulting firm, said Thompson needs to solidify his leadership team and start coming up with sharper menu innovations.

“McDonald’s has already put a lot of money into renovating the restaurants and updating the menu, so now (Thompson) needs to put together a plan to address slowing growth,” he said.

Howard Penney, managing director of research firm Hedgeye Risk Management in New Haven, Conn., said McDonald’s diverted its attention from food to beverages, and should refocus on new, exciting food products.

“They might even get loyalty cards, like Starbucks, to work,” Penney said. “If the ‘Plan to Win’ doesn’t win, they’ve got a problem. ... Thompson has a little time (to prove himself).”



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