McDonald’s Corp., the world’s largest restaurant chain by sales, said Friday that third-quarter profit fell 3.5 percent as sales growth slowed at U.S. stores.
Net income dropped to $1.46 billion, or $1.43 a share, from $1.51 billion, or $1.45, a year earlier, the Oak Brook, Ill.-based company said.
Foreign currency exchange-rate fluctuations reduced net income by 8 cents a share in the third quarter. Analysts projected $1.47, the average of 26 estimates compiled by Bloomberg News.
Chief Executive Officer Don Thompson, who took the helm in July, has tried to draw budget-conscious Americans with a new extra-value menu. Sales at U.S. stores open at least 13 months rose 1.2 percent in the quarter, the slowest growth in 11 quarters. Analysts projected an increase of 1.7 percent, according to 21 estimates compiled by Consensus Metrix.
“Restaurant spending is slowing across the globe,” said Bryan Elliott, an analyst at Raymond James Financial Inc. In response, McDonald’s, along with its rivals, has been advertising and promoting lower-priced items more, he said.
Yum! Brands Inc.’s Taco Bell chain has recently touted Doritos Locos Tacos while Burger King Worldwide Inc. has advertised new chicken items and featured coupons on its website. In the U.S., McDonald’s saw “broad competitive activity,” the company said. McDonald’s shares are down about 7 percent for 2012.
Global comparable store sales in October are “trending negative,” Thompson said. The chain hasn’t had a global monthly same-store sales decline in at least eight years.
McDonald’s, which has more than 33,700 locations worldwide, could see higher raw-ingredient costs as a smaller U.S. corn crop drives up costs for commodities such as beef and chicken. U.S. food prices could rise as much as 3.5 percent this year and 4 percent in 2013, according to data from the Department of Agriculture.
Third-quarter revenue declined 0.2 percent to $7.15 billion. Analysts estimated $7.17 billion, on average.
