A long-term profits decline at US fastfood giant McDonald’s has led to the company’s decision to withdraw from three countries in the Middle East and Latin America and close 175 restaurants in 10 countries.
As a result of the closures, it is reported that up to 600 jobs will be lost, 250 of which would be in the US where like-for-like sales have dropped 2.8% in the last year.
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The chain has seen its sales and profits fall as it struggles to compete with traditional rivals Wendy’s and Burger King, as well as so-called healthy chains such as Subway. McDonald’s, Wendy’s and Burger King have all suffered this year due to an ongoing price war between the three chains. Burger King’s owner Diageo is struggling to sell the fastfood chain, while Wendy’s has said it will not meet its 2002 earnings forecast.
McDonald’s has also attributed it poor financial performance to the impact of BSE in Japan and Europe.
This announcement closely follows the company’s decision to cut back on new store openings next year. To read more on this, just-food members click here.
McDonald’s also warned that its fourth-quarter earnings would be lower than previously forecast.
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By GlobalData
