NEW YORK The Golden Arches are starting to lose some of their shine.
McDonald’s Corp. says a key revenue figure came in flat in July as diners pulled back amid a rough economy. After years of outperforming rivals with a string of popular new items, the snag also suggests competition is intensifying for the world’s biggest hamburger chain.
The last time the global sales figure dipped for McDonald’s was in April of 2003. The figure has grown every month since then, even through the recession.
“McDonald’s may be underperforming the industry, which is not typical for them,” said Sara Senatore, a Bernstein analyst. She noted that Taco Bell is showing strength as a result of its popular new Doritos-flavored tacos, with revenue at restaurants open at least a year registering double-digit growth in the second quarter.
Burger King Worldwide Inc. and Wendy’s Co. are also revamping their menus and stepping up their marketing campaigns.
In the U.S., McDonald’s said its promotions failed to drive growth in July, and revenue at restaurants open at least 13 months dipped 0.1 percent.
The figure dipped 0.6 percent in Europe because of weakness in Germany and several Southern European markets. It fell 1.5 percent in the Asia Pacific, Middle East and Africa region – a key growth area for McDonald’s.
Sales in Latin America and Canada, which are not reported separately, helped pull overall results even with last year.
Overall, analysts had expected growth of 2.8 percent in July.
Revenue in restaurants open at least 13 months is a key measure of a restaurant chain’s performance because it strips out the impact of recently opened or closed stores. The figures are a snapshot of money spent on food at both company-owned and franchised restaurants. They do not reflect corporate revenue.
McDonald’s, which has more than 33,500 locations around the world, is often seen as a bellwether for the industry. Its stock price has nearly quadrupled over the past decade and surpassed the $100 mark late last year.
But shares have since declined and closed down almost 2 percent at $87.53 Wednesday.
The company has exceeded expectations over the years by emphasizing value and evolving its menu to keep up with changing tastes.
“This chain has gone through a complete metamorphosis since the early part of 2000s,” said Jack Russo, an analyst with Edward Jones. Now McDonald’s may struggle to continue delivering the same level of growth, he said.
“Instead of leading the pack as they have for so long, they’re running with the pack,” he said.
Still, Russo noted that there was also one less Friday and Saturday in July, which likely affected sales, and the timing this year of Ramadan – an Islamic time of fasting – could have hurt sales in the Asia Pacific, Middle East and Africa region. And McDonald’s sheer size still gives it a considerable marketing edge over competitors going forward.