McDonald's and the Crisis

Some people argue that McDonald's is benefiting from the crisis because people want cheap eats. For example, this source comments on the Q1 results:

"The positive result is due, in large part, to the crisis. With limited resources people tend to forgoe traditional restaurants when eating out opting for cheaper options"

A closer look at McDonald's financials does not support such a view:

Fx-adjusted worldwide revenues grew 1 % in 2008 (compared to 2007), and 2 % in Q1 2009 (compared to Q1 2008).

(Actually, McDonald's stresses growth of 4.3 % in its Q1 presentation, but that's so-called "comparable sales", not total fx-adjusted sales, which are hidden further down in their announcement)

I suppose it's fair to say that McDonalds is not particularly affected by the crisis. But if they are benefiting from it, how does that square with 1-2 % growth?

Interesting detail for China-watchers:

According to this report, Mc Donald's admitted that "we have seen a slowdown in China due to the economic environment there". Apparently, "customer traffic continued to grow in China during the quarter, but average purchases declined". Furthermore, it is mentioned that revenues were particularly weak in Southern China "due to the closure of many factories". No total China sales revenue figures are provided, so it's a fair assumption that they actually declined, or at best stagnated.

Interesting, isn't it? Statistics China tells us that Q1 retail sales (including restaurants) are up 15 %. But McDonald's is seeing enough of a slowdown to actually point it out in its results presentation...

However, McDonalds is far from being fast-food market leader in China. That honor goes to KFC, part of Yum Brands. Its China sales were up 20 % in 2008, and 12 % in Q1 2009. A slowdown, yes, but 12 % growth is far from catastrophic (source: company press release).

So maybe it's not the Chinese economy: Maybe the Chinese just don't like McDonalds all that much.