BUSINESS

McDonald's Hits Its Lowest Low In A Decade, By 1 Very Important Measure

08/08/2014 02:13 pm ET | Updated Aug 08, 2014
Scott Olson via Getty Images

Ronald McDonald is a sad clown today.

McDonald's global same-store sales, a measure of corporate health that tracks sales at stores open at least a year, dropped 2.5 percent in July, the company said on Friday. That was the fast-food giant's worst month in at least 10 years, according to a research note by analysts at Janney Capital Markets, a financial-services firm.

Things were notably bad in the U.S., where same-store sales were down 3.2 percent. The Golden Arches have struggled to stay relevant in their home country lately. Diners are flocking to fast-casual restaurants like Chipotle and Panera, as they slowly lose their appetite for burgers and fries and hanker for fresher, higher-quality food.

But the meat scandal that rocked Asia earlier this month was probably a bigger factor in the company’s terrible July. McDonald’s same-store sales in the Asia/Pacific, Middle East and Africa region dropped 7.3 percent. The company pulled basically all meat from its Chinese restaurants last month after a TV expose revealed that one of its suppliers was using expired meat and meat that fell on the floor.

McDonald’s and Yum Brands, the parent company of KFC, Taco Bell and Pizza Hut, cut ties with the supplier after the footage came to light.

The meat scandal could lead to a drop in global same-store sales this year, McDonald's warned, as the company looks to regain "trust and confidence" in Asia. A full-year decline in sales would be the first since 2002, according to the Janney note.

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