McDonald's October sales fall not as steep as expected

McDonald's Corp's (MCD.N) restaurant sales fell less than expected in October, the company said on Monday, but worries linger as it searches for the right recipe to compete with popular chains selling fresh made-to-order food.

Worldwide sales at restaurants open at least 13 months were down 0.5 per cent as the world's biggest fast-food chain continued to fight tough US competition, the after-effects of a supplier scandal in Asia, and economic and political turmoil in Europe.

Analysts expected a 2.2 per cent decline, according to research firm Consensus Metrix.

Same-restaurant sales fell 1 per cent in the United States, less than the 1.9 per cent decline analysts expected. Such sales have not increased at McDonald's since October 2013.

Under Chief Executive Officer Don Thompson, who took the helm in July 2012, the US operation is focusing on fresh ingredients and custom sandwich toppings as it seeks to compete more effectively with popular chains like Chipotle Mexican Grill Inc (CMG.N) and Subway, where diners pick the ingredients that go into their meals.

The Golden Arches also is giving restaurant operators more control over what they put on their menus and is expanding ordering to mobile devices and kiosks.

The company's shares were unchanged at US$95.10 (S$122.70) in early trading.

The changes come as McDonald's also struggles to get a leg up on smaller and more-nimble rivals such as Wendy's Co (WEN.O), Burger King Worldwide Inc (BKW.N), In-N-Out Burger and Chick-fil-A.

"Market share declines continue to be an issue in major markets," Stern Agee analyst Lynne Collier said in a client note.

Same-restaurant sales were off 4.2 per cent in the Asia/Pacific, Middle East and Africa region, where analysts had estimated a 6.1 per cent drop.

Diners shunned McDonald's restaurants in China and Japan after a television news expose showed workers mishandling meat at a key supplier in China. McDonald's scrambled to find new sources for ingredients to make its Chicken McNuggets and Big Macs.

Europe's comparable sales decreased 0.7 per cent due to store closures in Russia and "the significant weakening of the euro and Russian ruble."

Europe just edges out the United States as McDonald's top revenue market.