McDonald's August Sales Numbers Call for New Strategy

McDonald’s August comparable sales, released on Tuesday, showed 8.5 percent growth globally and 4.5 percent growth in the United States.

Not bad for a downturn, but the overall sales increased was only .04 percent higher than in the same period last year. Maybe more troubling is the drop in U.S. growth. In August 2007, McDonald’s sales grew by 7.4 percent; that’s a nearly 40 percent decrease in growth. Ouch!

The fast-food world has experienced a slowdown in recent months, blamed on reduced discretionary spending for U.S. consumers and increased commodity costs. Wendy’s had nearly flat growth through six months of 2008. Burger King’s revenues grew 10 percent, according to its most recent annual report posted in August.

What’s funny is each company is choosing to deal with the financial troubles in different ways. BK is raising prices. Wendy’s is testing an entire new line of products with specialty coffees, as well as adding a double cheeseburger to the dollar menu. McD’s hasn’t announced anything yet.

Changing products looks like a smart move considering much of the new items are coffees, which will not create evermore exorbitant commodity costs. Also the dollar menu strategy makes sense, as people need cheaper dinner options. Rising prices, though? Not such a good move. Then consumer discretionary spending really does become a problem.

McDonald’s will have to make changes as well, but what? Speculation is that some of the dollar menu will change. This marks a new approach, considering much of the chain’s success in the down market has come from grabbing customers who are low on cash.