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Courier-Mail
6 days ago
- Business
- Courier-Mail
McDonald's battles ‘fierce' Aussie competition as global sales drop
Don't miss out on the headlines from Restaurants & Bars. Followed categories will be added to My News. The famous golden arches might be losing their glow, with McDonald's recording a surprising drop in global sales as the fast-food giant battles 'fierce' competition in Australia. McDonald's reported a one per cent fall in global comparable sales in the first quarter of the year compared to the same period in 2024, which included a Leap Day. In its US birthplace, McDonald's recorded a 3.6 per cent decline in sales – marking the biggest sales drop since the pandemic, when restrictions were in place. McDonald's attributed a decrease in the number of comparable customer transactions at restaurants as a major factor behind its decline in US sales. McDonald's Chairman and CEO Chris Kempczinski said customers were 'grappling with uncertainty'. 'McDonald's has a 70-year legacy of innovation, leadership, and proven agility, all of which give us confidence in our ability to navigate even the toughest of market conditions and gain market share,' Mr Kempczinski said. McDonald's recorded a 3.6 per cent decline in sales in the US. Picture: Charly Triballeau/AFP In Australia, research suggests the fast-food giant's sales are rising, with market research firm IBISWorld estimating McDonald's sales to be $5.7 billion in 2024-2025, compared to $5.4 billion in 2023-2024. But it's not all good news, with the fast-food giant having to fight off hungry competitors eating into its market. 'While absolute sales figures might be rising, it is anticipated that McDonald's is losing market share to other fast food providers in Australia,' IBISWorld Industry Team Leader Disha Jeswanth told adding 'McDonald's faces fierce competition from several sources'. 'Within the fast food segment, the main differentiator is price in terms of value for money.' According to IBISWorld, McDonald's market share has consistently dropped from 21.5 per cent in 2021-2022 to 19.3 per cent in 2024-25. McDonald's is fighting off hungry competitors eating into its Australian market. Picture: Glenn Campbell Aside from competing against KFC, Dominos as well as burger joints of the likes of Hungry Jack's and Grill'd, McDonald's is also facing off with Mexican food brand Guzman y Gomez (GYG) which has proven itself to be a 'major emerging competitor'. 'Guzman y Gomez is capturing market share through its perceived healthier food offerings,' said Ms Jeswanth. 'While a large burger meal at Maccas is averaging above $15 these days, GYG is offering a burrito bowl for a similar price. The brand is also marketing its use of free-range chicken and high-quality ingredients. 'GYG's next move involves expanding into drive-thru operations, which will further weigh on McDonald's demand.' 'Grill'd, on the other hand, although it doesn't compete with Maccas on the basis of price, is offering gourmet burgers that are often a healthier choice.' To counter this, Ms Jeswanth notes McDonald's has continued sourcing over 90 per cent of its ingredients locally and using 100 per cent RSPCA-approved chicken. 'McDonald's also provides nutritional information with its food orders to maintain transparency. However, public perception around McDonald's food quality remains a challenge.' Guzman Gomez is a major emerging competitor against McDonald's. Picture: NewsWire/Gaye Gerard Jump in price An increase in prices, as other restaurants have done amid rising cost-of-living and inflation, have also hurt McDonald's reputation. 'McDonald's value proposition has long centred on providing affordable meals, appealing especially to budget-conscious consumers,' said Ms Jeswanth. 'However, consistent price increases in recent years, driven by rising input costs and wages have eroded this perception of value.' The price of a large fries has increased by more than 50 per cent since 2019, from $3.20 to $4.85 as of this month, while a classic Angus burger is up more than 25 per cent from $7.95 to $10. The increase has come at a time when cost-of-living pressures has changed Australians' spending habits. 'Lower-income households and younger consumers are extremely cautious of their discretionary spending', said Ms Jeswanth. McDonald's has seen an increase in prices in recent years. According to Finder's Consumer Sentiment, only 61 per cent of Australians reported spending money on food delivery or takeaway services per week in May 2025, compared to 68 per cent in May 2022. 'The cost of living is putting significant pressure on household budgets, and one area many Australians are cutting back on is non-essential spending such as takeaway,' Graham Cooke, head of consumer research at Finder told 'Fast food prices of some menu items at McDonalds have been rising faster than inflation. 'At the same time, local fast-food brands have diversified their offerings.' 'When groceries, energy bills, and housing costs rise, the convenience of restaurant-prepared meals becomes a luxury that is harder to justify for many individuals and families,' he added. 'What might have been a weekly or even bi-weekly habit could shift to a monthly treat or only for special occasions.' X Low customer satisfaction According to Sydney-based Fonto, which conducts weekly surveys of customer experiences at 19 Quick Service Restaurants (QSR) across Australia, McDonald's consistently underperforms on customer satisfaction compared to other brands across the last 16 months. In the first quarter of the year ending in April, McDonald's scored 69 per cent overall satisfaction – a drop from 71 per cent compared to the same period last year. Out of the top 15 brands, the fast-food giant was ranked last in the first quarter of this year. 'We're seeing consistently that McDonald's ranks towards the very bottom,' Fonto CEO Ben Dixon told adding it sits in the bottom third of 19 brands. Meanwhile, competitors GYG, Crust and Grill'd made up the top three brands for overall satisfaction. 'They're really focusing on fresh and healthy, they're brands that an athlete would consider buying from, and their prices aren't too far away. The gap in price used to be quite significant between, say, a Grill'd burger and a McDonald's meal, and it's not as big anymore.' Grill'd beef burgers range from $13.50 to $16.50, according to current prices listed on its website. In the first quarter of the year, McDonald's ranked 13 for price out of the top 15 brands. 'McDonald's customers have consistently got the least satisfaction with their prices than any of the other brands,' said Mr Dixon. 'So people feel like they're still paying a lot, and the quality is not there for what they're paying.' Grill'd recorded 88 per cent overall satisfaction among customers surveyed by Fonto between February and April 2025. Between March 2024-May 2024, Grill'd's overall satisfaction jumped from 85 per cent between to 88 per cent between February and April 2025. Over the same period, McDonald's dropped from 74 per cent to 69 per cent respectively. Despite the low customer satisfaction, 75 per cent of McDonald's customers told Fonto they didn't consider going elsewhere. Mr Dixon said one major reason behind this decision is proximity, with McDonald's owning over 1,000 restaurants across the country. 'If you're in a regional or rural area then it's hard to consider going somewhere else if there's nothing for a long way away,' he said. McDonald's over 1,000 restaurants across the country. Picture: Evan Morgan But as competitors open more stores the game could change. Last year, GYG announced its goal to expand its network to over 1,000 stores. 'The question that everyone probably needs to think about is, if every town had a strip, and in that strip was a McDonald's, a Hungry Jack's, a KFC and a Subway, would McDonald's hold the massive market there that it does?' Mr Dixon questioned. 'Or would people move between them because they don't want to eat a burger every night, or because the quality and the satisfaction is not necessarily as high in some of those restaurants?' The future of fast food in Australia New competitors such as US-based chicken chain Wingstop – which opened its first store in Australia this month – is also looking to take a bite out of an increasingly crowded market. 'McDonald's has stood the test of time in the Australian market, there is always the risk of losing market share to new competitors,' said Ms Jeswanth. 'International fast food giant Wendy's is set to expand to over 200 locations in Australia over the next decade, proving to be a direct competitor to Maccas.' To compete, Ms Jeswanth said brands will need to focus on providing premium quality and healthier meals at affordable prices. 'Consumer behaviour is tilting towards sustainable and healthier options, and fast food giants will need to match these preferences (including plant-based options) to remain viable in his highly competitive market,' she said. The fast food market is predicted to become more crowded in Australia. Picture: Glenn Campbell 'Despite McDonald's loyalty and scale within Australia, the brand will need to focus on bettering its offerings to remain competitive.' Mr Dixon agrees 'the competition will just get tougher'. 'If I was McDonald's or a McDonald's franchisee, I'd have my work ahead of me,' he said. 'They've got to think seriously about how they reinvent themselves again, or what they do differently to continue to dominate.' contacted McDonald's for comment but was referred to its first-quarter sales data. Originally published as McDonald's battles 'fierce' competition in Australia as global sales drop
Yahoo
15-05-2025
- Business
- Yahoo
Arcos Dorados Holdings Inc (ARCO) Q1 2025 Earnings Call Highlights: Navigating Challenges with ...
Release Date: May 14, 2025 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Arcos Dorados Holdings Inc (NYSE:ARCO) reported total revenue of $1.1 billion, maintaining levels from the previous year despite challenging conditions. Digital sales accounted for almost 60% of system-wide sales in the first quarter, with notable strength in loyalty programs and mobile order and pay. The company saw a strong rebound in Argentina, contributing to a 38.7% rise in comparable sales in the SLAT division. Arcos Dorados Holdings Inc (NYSE:ARCO) has a robust marketing plan for the remainder of the year, which is expected to improve sales performance. The company has a strong balance sheet with an investment-grade rating from Fitch and no material debt maturities until 2029. First quarter consolidated adjusted EBITDA was $91.3 million, down from the previous year due to weaker local currencies and margin pressure in Brazil. Brazil's margin contraction was mainly due to higher food and paper costs from rising beef prices. The QSR industry in Brazil and NOLAD experienced reduced traffic, attributed to lower consumer purchasing power. The company faced significant headwinds from calendar effects, including Leap Day and Holy Week, impacting sales comparisons. There was a decline in first-quarter EBITDA margin due to higher food, paper, occupancy, and other expenses as a percentage of revenue. Warning! GuruFocus has detected 3 Warning Sign with ARCO. Q: Could you comment on sales trends in the early 2nd quarter of 2025, especially in Brazil and NOLAD, under a more normalized quarter in terms of calendar effects? How much of the weak comparable sales in the first quarter is attributable to negative calendar effects versus a weaker consumption environment? A: (Marcelo Raba, CEO) In NOLAD, particularly Mexico, Panama, and Costa Rica, we faced reduced traffic in the QSR industry due to calendar effects like Holy Week. However, April showed strong performance, especially in Mexico, which is a significant market for us. We see a positive outlook for NOLAD in the coming quarters. (Luisagannao, COO) In Brazil, the calendar impact was significant, but the QSR visits were down due to lower consumer purchasing power. We remained cautious with pricing, but delivery performed strongly. We expect improved performance as the year progresses. Q: How does the company see competition passing higher beef prices into prices, and when should we start seeing a recovery in margins in Brazil? A: (Mariana Tannenbaum, CFO) During the first quarter, we faced increased beef prices in Brazil, impacting margins. We expect to stabilize gross margins through pricing strategies, supplier negotiations, and revenue management initiatives. We anticipate margins for 2025 to be similar to 2024, excluding last year's payroll expense reversals and credits in Brazil. Q: What is the company's perception of recent consumption trends in Argentina, and how can we think about the region's outlook for 2025? A: (Luisagannao, COO) Argentina showed a strong rebound due to a more stable economic environment. We expect sustained growth in volumes, sales, and margins throughout the year. The market team is doing an excellent job, and we anticipate continued positive performance in Argentina and the SLAT region. Q: Can you expand on why you only expected a 10 basis points decline in the royalty expense on a consolidated basis? A: (Marcelo Raba, CEO) The new MFA with McDonald's set a 6% contract royalty rate, eliminating the growth support concept. Brazil now pays 6% of sales, while NOLAD and SLAT pay 6% instead of 7%. This results in a 10 basis points reduction in royalties, providing a small positive impact on EBITDA margins. Q: Can you talk about consumption in Brazil and whether there are signs of improvement? A: (Marcelo Raba, CEO) The leap day had a 110 basis points impact on comparable sales, and Holy Week affected Mexico significantly. While trends are improving, the consumption environment remains volatile. We focus on maintaining customer traffic and offering competitive promotions to build a sustainable business. Despite challenges, we are gaining market share and are well-positioned for future growth. For the complete transcript of the earnings call, please refer to the full earnings call transcript. This article first appeared on GuruFocus. Sign in to access your portfolio
Yahoo
15-05-2025
- Business
- Yahoo
Arcos Dorados Q1 Earnings Miss Estimates, Revenues Surpass
Arcos Dorados Holdings Inc.'s ARCO first-quarter 2025 earnings missed the Zacks Consensus Estimate but revenues beat the same. On a year-over-year basis, the bottom line grew while the top line the quarter, management highlighted the impact of adverse foreign currency translation effects and macroeconomic pressures in several key markets. While revenues in constant currency grew year over year, U.S. dollar-denominated figures were dragged down by weaker local currencies, especially in Brazil and Argentina. Additionally, cautious consumer spending across Latin America limited traffic growth at its the results, the company's shares lost 5.6% during trading hours yesterday. The company reported adjusted earnings per share (EPS) of 7 cents, which lagged the Zacks Consensus Estimate of 13 cents by 46.2%. In the year-ago quarter, it reported an adjusted EPS of 14 cents. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.) Arcos Dorados Holdings Inc. price-consensus-eps-surprise-chart | Arcos Dorados Holdings Inc. Quote The quarterly revenues of $1.08 billion topped the consensus mark of $1.07 billion by 0.9% but declined 0.4% year over year. The performance was tempered by calendar effects such as Leap Day and Holy Week, and significantly impacted by currency depreciation in several key markets. On a constant currency basis, the quarterly revenues grew 14.1% from last year's the first quarter, the company's systemwide comparable sales grew 11.1% year over year compared with 21.5% growth reported in the prior-year quarter. The quarter's digital sales increased 6.3% year over year. During the first quarter, food and paper costs came in at $366.6 million compared with $360.9 million reported in the prior-year quarter. General and administrative expenses were up 6.8% year over year to $73.3 operating income was $45.1 million compared with $67.6 million reported in the prior-year EBITDA during the quarter came in at $91.3 million compared with $108.9 million reported in the prior-year quarter. The adjusted EBITDA margin contracted 160 basis points (bps) year over year to 8.5%. As of March 31, 2025, Arcos Dorados had total cash and cash equivalents of $404.6 million, up from $135.1 million at financial debt as of March 31, 2025, was $1.16 billion, up from $707.6 million as of 2024-end. In the first quarter of 2025, Arcos Dorados expanded its footprint by adding 12 new Experience of the Future (EOTF) restaurants, including 10 free-standing units. By the end of March 2025, it operated a total of 1,669 EOTF restaurants, representing 68% of its overall restaurant portfolio. The company aims to ramp up its development pace throughout the year to meet its full-year target of opening 90 to 100 new locations. Arcos Dorados currently has a Zacks Rank #4 (Sell). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here. Domino's Pizza, Inc. DPZ reported first-quarter fiscal 2025 results with earnings beating the Zacks Consensus Estimate, while revenues missed the same. The company reported adjusted EPS of $4.33, up from $3.58 reported in the year-ago quarter. Revenues of $1.11 billion increased 2.5% on a year-over-year reported benefits from the Hungry for MORE strategy during the quarter, registering growth in market share across the U.S. and international segments. DPZ continued to manage controllable factors well despite a tough global environment. The strategy supported an increase in sales, store openings and profits. These factors are important for long-term value creation for franchisees and International, Inc. EAT reported third-quarter fiscal 2025 results, with earnings and revenues beating the Zacks Consensus Estimate. The company reported adjusted EPS of $2.66, up from $1.24 reported in the year-ago quarter. Revenues of $1.43 billion increased 27.2% on a year-over-year quarterly performance benefited from strong fundamentals, leading to better guest experience and steady business growth. The ongoing increase in traffic continues to drive the company's Brands, Inc. YUM reported first-quarter 2025 results, with adjusted earnings beating the Zacks Consensus Estimate and revenues missing the same. The company reported adjusted EPS of $1.30, up from $1.15 reported in the year-ago quarter. Revenues of $1.79 billion increased 12% on a year-over-year company's performance reflects solid contributions from the KFC and Taco Bell divisions. On the digital front, it reported meaningful progress, with digital sales nearing $9 billion and accounting for 55% of total sales. Franchisee feedback on Yum!'s proprietary digital platform, Byte by Yum!, remained positive, reinforcing the brand's strategic push toward tech-driven growth. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Yum! Brands, Inc. (YUM) : Free Stock Analysis Report Domino's Pizza Inc (DPZ) : Free Stock Analysis Report Brinker International, Inc. (EAT) : Free Stock Analysis Report Arcos Dorados Holdings Inc. (ARCO) : Free Stock Analysis Report This article originally published on Zacks Investment Research ( Zacks Investment Research Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
New York Post
15-05-2025
- Business
- New York Post
Walmart warns ‘unprecedented' price hikes are coming as tariffed goods start to hit shelves
Walmart said Thursday it plans to increase prices this month as tariffed goods start to hit shelves — warning that the size and speed of the price hikes could be 'unprecedented'. The Arkansas-based retail giant has already started raising markups on certain items as suppliers pass along the additional costs. Bananas, for example, jumped to 54 cents a pound, up from 50 cents, according to Walmart Chief Financial Officer John David Rainey. 'The magnitude and speed at which these prices are coming to us is somewhat unprecedented in history,' Rainey told the Wall Street Journal. Advertisement 3 Walmart said it plans to start hiking prices across its stores this month. ALLISON DINNER/EPA-EFE/Shutterstock Earlier this week, the US reached a temporary deal with China to lower their respective rates for 90 days and allow more time for negotiations. Trump slashed his tariff on China to 30% from 145%, which boosted markets. Advertisement While a 30% tariff is better, it's still 'too high,' and will lead to higher prices for the consumer 'towards the tail end of this month, and then certainly much more in June,' Rainey told CNBC. That's been a big fear for investors, who sent stock indexes on steep declines after Trump revealed his harsh tariffs on many nations in early April. At the same time, the company plans to absorb some tariff costs to 'play offense' and keep its prices lower than competitors', Rainey told CNBC. The world's largest retailer on Thursday maintained its full-year guidance, but withheld its profit forecast for the current quarter as it warned it's facing a dynamic environment. Advertisement 3 Walmart said it plans to absorb some of the tariff costs so it can keep prices low amid the trade war. ALLISON DINNER/EPA-EFE/Shutterstock While many other retailers reported disappointing earnings in the most recent quarter, Walmart saw a sales boom as shoppers – fearful that President Trump's trade war could reheat inflation or trigger a recession – flocked to the chain's discounts and speedy shipping. Consumer sentiment has plunged, and the nation's economy unexpectedly shrank in the first three months of 2025 as companies rushed to import goods ahead of the tariffs. Retailers suspended their annual forecasts and disclosed dismal earnings – but Walmart on Thursday reported strong sales. Advertisement Its US same-store sales jumped 4.5% for Walmart locations and 6.7% for Sam's Club in the three months ending May 2, above expectations. Walmart's e-commerce sales rose 21% in the US, its 12th double-digit gain in a row. Global online sales jumped 22% from the year before. 3 President Trump unveiled harsh tariff rates on many nations during a press conference in the Rose Garden in early April. REUTERS Net income fell to $4.49 billion, or 56 cents a share, down from $5.10 billion, or 63 cents per share, in the same period last year. Revenue rose about 2.5% from $161.5 billion, including a 1% headwind since Leap Day took place last year. However, it missed expectations of $165.84 billion – its first quarterly revenue miss since February 2020. Yet the retailer expects to come out on top amid the trade war, saying more high-income households chose Walmart for groceries in the previous quarter and customers shopped the chain's affordable brand and temporary deals. 'History tells us that when we lean into these periods of uncertainty, Walmart emerges on the other side with greater share and a stronger business,' Rainey said last month after the company announced it would stick to its full-year forecasts. Walmart has not canceled any orders, but it has cut back on the size of some purchases, buying less of items that it expects customers to pull back on due to the tariffs.
Time Out
15-05-2025
- General
- Time Out
These are the 10 most (and least) popular birthdays in Australia
Birthdays are a funny thing. Some people turn theirs into a month-long affair, complete with boozy brunches, long family lunches and maybe even a cheeky weekend getaway. Others will do anything to avoid the candle blowing kerfuffle and suffering through 'Happy Birthday' while the whole restaurant gives them side-eye. Love them or hate them, you can't avoid having a birthday – some days are just more special, or popular, than the rest. The Australian Bureau of Statistics (ABS) has crunched the numbers to reveal our nation's most and least common birthdays from 2014 to 2023. It's the first time they've done the maths since 2016, and reveals some pretty cool stats. September 21 took the cake (literally) as the most popular birthday in Australia, with almost 9,000 Aussies born on that day. If you do the maths, that's roughly nine months after Christmas… Just one baby separated September 21 from March 17, which came in as the second most common birthday in Australia. Overall, March was the most popular month, claiming seven out of the top ten spots. The only other outliers were February 10 in fourth place and May 5 in eighth. On the flip side, February 29 is the least common birthday in Australia – but that's no surprise given it's Leap Day (which happens once every four years). Randomly, five out of the ten rarest birthdays were public holidays, including December 25 (Christmas) in second, December 26 (Boxing Day) in third, January 1 (New Year's Day) in fourth and January 26 in fifth. But this actually checks out, as many prospective parents avoid scheduling C-sections or labour inductions on these big days. Check out if your birthday lands on either list below. These are the 10 most popular birthdays in Australia September 21 March 17 March 3 February 10 March 31 March 24 March 16 May 5 March 10 March 2 These are the 10 least popular birthdays in Australia February 29 (Leap Day) December 25 (Christmas) December 26 (Boxing Day) January 1 (New Year's Day) January 26 (Invasion Day) December 24 (Christmas Eve) December 27 April 25 (Anzac Day) December 31 (New Year's Eve) December 13
