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McDonald’s US Sales Decline: A Result of Fierce Price Wars and Recession

McDonald’s is finally faltering from the rising competition and US poor unemployment rapport. Is it representing the big picture of franchising today?

McDonalds New Jersey

McDonald's at Toms River, New Jersey, US

For McDonald’s, it’s always been me against the world – Competitors are doing their best to secure and grow their market shares in the industry. Like it or not, competition always drag the competing entities to price war – and we all do know that price war is where we DON’T want our franchises involved in.

Unfortunately, the recent news of McDonald’s US sales decline indicates that, like it or not, McDonald’s has to play the price war game. As the pressure of unemployment mounting, McDonald’s is finally (and officially) hit by the recession.

It is reported that on Tuesday, McDonald’s November sales at their US restaurants open at least a year fell 0.6 percent – the second consecutive monthly decline (in November, McDonald’s performance were even worse than October’s figure of 0.1 percent.)

How about McDonald’s international sales figures? It was better – 0.7 percent rise in November – but the figure could be affected by the declining dollar (meaning, foreign sales appear to be higher than it supposed to be.)

The poor performance, although better than other franchises in the industry, is also affected by the increased competition from rivals, namely: Taco Bell’s value menu starting from 79 cents, Wendy’s $2.99 combos, Burger King’s $1 double cheeseburger (to directly compete with McDonald’s very own $1 McDouble.)

Another, overlooked, culprit of McDonald’s could-be-better international sales figure is their dispute with franchisees overseas. One example: In Indonesia, McDonald’s has ended a dispute with a franchisee, which results in the contract breakup involving 13 McDonald’s restaurants (those restaurants are not going out of business, but they have been relaunched under a new brand name.)

The economy is, indeed, uncertain these days – We can’t generalise that what happened to McDonald’s will happen to the entire franchising world. Some franchises went out of business, some thrives – only the best survives… and McDonald’s – no matter how we love or hate them – is still one of the best in global franchising.

Ivan Widjaya
Recession hits McDonald’s
Image by LancerE.

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