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Shares of McDonald’s (NYSE:MCD) have slid 7.6 percent this year to date. Increased global competition from Yum! Brands (NYSE:YUM) (KFC, Pizza Hut, Taco Bell) and consumer spending cuts in Europe, where the company gets about 40 percent of its revenue, are largely to blame. In spite of this, McDonald’s has said that sales at stores open at least 13 months rose 13.7 percent in August, citing growth in China and Australia.
Despite local competition, McDonald’s plans to open 250 new stores in China. “They’re working on more value right now everywhere in the world, including China,” says Larry Miller, an analyst at RBC Capital Markets. McDonald’s two-pronged attack is to offer appealing, localized menu items at cheaper prices. As the global economy remains shaky, it is essential that the company appeals to budget-conscious consumers.
Competitor Burger King (NYSE:BKW) has seen a comparable year-to-date decline of 7.5 percent. Yum! is up 13.85 percent over the same period. In America, the success of Darden Restaurants (NYSE:DRI), and to a lesser extent Chipotle (NYSE:CMG), have put pressure on McDonald’s to pursue foreign markets.
McDonald’s as seen “positive results in the U.K., France, and Russia,” and has high hopes for vegetarian offerings in India.
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