Corporate News: McDonald’s Cranks Up The Volume on ‘Value’

McDonald’s Corp. is expected to see a decreasing trend in sales, despite expectations that first-quarter profits will increase. Chief Executive Don Thompson explained that the world’s largest restaurant chain would have to sacrifice profit margin to attract consumers during a time where consumer spending is down.  McDonald’s has noticed that it must advertise the Dollar menu more aggressively, as promotions of higher-priced menu items were unsuccessful last year.  With high gas prices, the payroll tax rising, and employment increases slowing down, advertising value has become the key for any business.

After McDonald’s stock dipped 10% in 2012, the company has rebounded to reach a new closing high of $103.59.  Perhaps the best news about the restaurant chain’s recent struggles is that it still outperformed its competitors.  The fast-food sector has made no improvement, with growth declining in January, and with that trend expected to continue, McDonald’s may be forced to continue sacrificing profit.

Written by: Constantine Kostikas

Source: The Wall Street Journal


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