You know times must be tough when McDonald's says consumers are struggling. But are diners really too stretched for the Dollar Menu, or is there something else going on?
The fast food giant said Monday that global sales and earnings rose in the second quarter, though profits fell short of analysts' expectations.
McDonald's warned that sales will be "relatively flat" in July and that results will be "challenged" in the second half of the year.
The fast food market "remains challenging and economic uncertainty is pressuring consumer spending," said McDonald's CEO Don Thompson.
Shares of McDonald's (MCD) were down nearly 3% in afternoon trading.
McDonald's tends to thrive in a down economy, so it seems strange that the company would blame "economic uncertainty" for its poor performance. U.S. same store sales, a key metric of a retailer's health, rose 1% in the quarter. Sales fell in Europe, and were weak in China, Australia and Japan.
While the U.S. economy has been growing at a sluggish pace, consumer sentiment has actually improved in recent months, suggesting that there may be other reasons behind the weakness in McDonald's numbers.
Investors on StockTwits had a few theories.
Please, can we leave Chipotle Mexican Grill (CMG) out of this? Some of us might be going there for lunch.
On second thought, maybe Whole Foods (WFM) for lunch sounds good.
Despite questions about the nutritional value of its food, McDonald's still pays a healthy dividend.
For some investors, the weaker-than-expected results shows that McDonald's has simply run out of innovative ideas to whet consumers' appetites.
Another theory suggests McDonald's is struggling with more fundamental challenges.
That's back to the innovation question. But others see a broader trend in McDonald's numbers, which came after disappointing results from another big consumer staples company.
Coca-Cola reported earnings last week that met expectations but revenue fell short, and investors bailed.
The opinions expressed in this commentary are solely those of Paul R. La Monica. Other than Time Warner, the parent of CNNMoney, Abbott Laboratories and AbbVie, La Monica does not own positions in any individual stocks.
The stock market is hotter than Tiger Woods' golf game. (Although I don't think he's going to win another green jacket at Augusta this weekend.)
But even though the Dow and S&P 500 are hitting new MOREPaul R. La Monica - Apr 11, 2013 12:52 PM ET
Investing 101: If a stock is priced for perfection, bad news is going to cause a rush for the exits. That definitely was happening with fast food giant Yum! Brands (YUM) on Friday.
Even though the company reaffirmed its outlook for 2013, investors were spooked by an alarming 4% decline in same-store sales in China. Yum has focused heavily on China, particularly through its KFC franchise.
Shares fell nearly 10%. An overreaction? MOREPaul R. La Monica - Nov 30, 2012 12:32 PM ET
Even the dollar value menu couldn't coax consumers to McDonald's in July.
Same-store sales were flat in the United States and Europe, and sales were down 1.5% throughout Asia, the Middle East and Africa.
The house that Ronald McDonald built did try but "promotional activity" couldn't offset the sluggish global economy, the company said in a statement. One bright spot was the most important meal of the day: Breakfast.
McDonald's (MCD) said consumers MORECatherine Tymkiw - Aug 8, 2012 3:49 PM ET
Shares of Chipotle Mexican Grill plunged more than 20% Friday after the company reported weaker-than-expected sales growth, even as profits rose in the second quarter.
Chipotle (CMG) stock fell $92.28, or 23%, to $311.98 a share. Shares of McDonald's (MCD), Wendys (WEN) and Taco Bell-owner Yum brands (YUM) were down between 1% and 2%.
The sell-off came after Chipotle said late Thursday that same-store sales, a key measure of demand, grew only MOREBen Rooney - Jul 20, 2012 12:55 PM ET
When you think about the 4th of July, fireworks, backyard barbecues and Tchaikovsky's "1812 Overture" (music with cannons!) probably come to mind. And thanks largely to ESPN, the gluttonous International Hot Dog Eating Contest down in Brooklyn's Coney Island has also become a national Independence Day tradition.
The contest has been going on since 1916 at the Nathan's Famous hot dog stand at the corner of Surf and Stillwell Avenues -- MOREPaul R. La Monica - Jul 2, 2012 9:44 AM ET
Will the third trip to the public markets be the charm for Burger King's investors?
Burger King (BKW) started trading on the New York Stock Exchange Wednesday, and the home of the Whopper quickly popped nearly 7% from its opening price of $14.50.
In early April, the world's second largest hamburger fast food chain announced a new healthier menu replete with salads, wraps and smoothies. (The new bacon sundae is a glaring MOREMaureen Farrell - Jun 20, 2012 10:54 AM ET
Fast food. Slow economy. Europe and China are starting to hurt McDonald's (MCD). And the fears of a China pullback have really weighed on Yum (YUM), whose KFC brand is huge in China. Still, some traders are still bullish on Happy Meals and the Colonel's Crispy Strips.
HedgeyeHWP: $MCD - "Europe posted a 2.9% increase in comparable sales for May driven by the U.K., Russia and Fr, partially offset by Germany" MOREPaul R. La Monica - Jun 8, 2012 2:53 PM ET
Shares of McDonald's and KFC-owner Yum! Brands declined Friday amid growing fears about slowing economic growth in China.
McDonald's announced that its sales at stores open at least a year in the Asia, the Middle East and Africa region declined 1.7% in May, with particular weakness in Japan and China.
In fact, sales in China declined for the first time since November 2009, said Lynne Collier, analyst at Sterne Agee. Collier said that her conversations MOREHibah Yousuf - Jun 8, 2012 12:36 PM ET
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