Ronald McDonald: "I'm not lovin' it"

Have the Golden Arches lost their allure?

You could be forgiven for thinking that a fast food chain like McDonald's would rejoice at the first sign of a recession as people favour a cheaper, easier ways to feed themselves and that the Golden Arches would be a can't-miss recession play for global investors.

But, as reported in BusinessWeek at the start of November, shares of the fast-food giant have been flat in 2009 during one of the most dramatic stock rallies in history. And now, one of the world's largest companies said today that sales in the US have actually fallen for November - only the fourth time the monthly figure failed to show an increase in over six and a half years.

Global sales show increase

However, McDonald's continues to grow overseas with overall sales actually showing a 0.7 percent increase. This is helped in large part by a weakening dollar which allows companies like the fast-food giant, who have a large international presence, because overseas revenue translates back into more greenbacks.

Whereas the recession means people are more open to the less expensive McDonald's menu, rising unemployment in the US keeps customers away during its breakfast and lunch hours. Not even a "dollar breakfast menu" could coax eaters back through the golden arches.

This summer visits to fast-food restaurants declined 3 percent, the worst performance in decades.

People eating at home more

Families have been choosing to eat at home more and more as the recession drags on, and an initial hike in sales that was helped by price hikes of as much as 10 percent in markets such as the Western US, have now tailed off.

This has led to shareholders criticising McDonald's for "pricing themselves out of the market" by refusing to allow their prices to follow the economic slide in an effort to maintain margins.

For the year to date, sales at US restaurants open at least 13 months climbed 2.8 percent. European sales gained 5.2 percent, while sales for the Middle East, Africa and Asia/Pacific rose 3.6 percent. Overall sales increased 3.9 percent, as told by BusinessWeek.

With unemployment rates - which still stands at nearly 10 percent - unlikely to show an increase until well into 2010, McDonald's may continue to struggle in posting a sales increase, in the US at least.

But in the mean time, McDonald's global performance will be able to keep them afloat, so there are still many happy meals to come from those famous golden arches.

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