Plunging Profit Makes Clear: 'McDonald's Has a Problem'

Chain reports 30% drop
By John Johnson,  Newser Staff
Posted Oct 21, 2014 2:17 PM CDT
Plunging Profit Makes Clear: 'McDonald's Has a Problem'
A McDonald's sign in East Palo Alto, Calif.   (AP Photo/Paul Sakuma, File)

Investors were bracing for lousy numbers from McDonald's today, and the chain failed to meet even those expectations. McDonald's reported a 30% drop in quarterly profit, thanks to what the Wall Street Journal calls "problems in nearly every major part of its business." As one analyst puts it to CNBC: "Holy moley!" Sales were down in the US, in Europe, and in China, with dismal numbers in the latter country hurt further by a meat scandal. But this isn't about one-time trouble. "McDonald's has a problem," writes Ben Levisohn at Barrons. "Investors have known this for a while, and now it seems McDonald’s management does too."

In the US, at least, a big part of that problem is that the chain "has struggled to maintain its relevancy with millennials," writes Lauren Gensler at Forbes. In fact, McDonald's "is struggling to remain relevant," period, she writes. CEO Don Thompson unveiled reforms today to try to turn things around, starting with a push to "simplify" the menu and let people customize their food to a greater extent, reports AP. But "it might take bigger steps, however, before investors can start believing in McDonald’s again," writes Levisohn. (Click to read about McDonald's latest trouble in Russia.)

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