In my previous McDonald's (NYSE:MCD) article entitled McDonald's Large Size Is No Excuse For Lack Of Creative Innovation, I stated, among other things:
"You know what I get tired of hearing? That McDonald's is so big, it's a handicap. The logic is as follows, and makes sense on the face of it: McDonald's is so huge that creative innovation isn't as simple as it is for smaller chains, because the company has to not only come up with new items that are appealing, but has to be sure it has to deal with the massive quantity and distribution challenges when testing any new product idea. I say bologna, and I'll tell you why.
McDonald's doesn't have to distribute anything nationally. You can get spam and eggs at McDonald's Hawaii. In some places you can get a lobster roll at McDonald's. In India, you can get a potato burger. You can get a Quiche de Queijo (cheese quiche) in Brazil and a Red Bean Pie in Hong Kong. The point is McDonald's can cater to not only local tastes, but it is not bound by quantity or distribution. It has the same exact advantages of "being small" as its competitors, such as Sonic, Burger King, Wendy's, Jack in the Box, and all the rest that are seeing growth."
November same-store sales growth results are now out. In Asia it tumbled 4.0%. In Europe, it slipped 2.0%. And in the U.S. it collapsed 4.6% on top of the 0.8% dip in the year-ago period. CEO Donald Thompson stated, "Today's consumers increasingly demand more choice, convenience and value in their dining-out experience." The release went on to say MCD is planning to "implement a more locally-driven organizational structure to increase relevance with consumers." This follows my previous article calling for MCD to focus on innovation regardless of national distribution and doing more of it locally if necessary as it sees fit.
We all knew the same-store sales domestically would be weak, but this was a percentage point or two weaker than I expected. I'm still bullish on MCD as I believe management will figure out solutions to its growth problems including its new "Create Your Taste" gourmet customized burger kiosks.
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