Burger giants make poor start to 2001
McDonald's has reported a 16% drop in profits to US$378.3m in the first quarter of 2001 against the same period in 2000. Chief executive officer Jack Greenberg blamed consumer concerns regarding European beef, weak economies and even the extra leap year day in 2000 for the disparity in the results.
European sales were down 6% year-on-year to US$2.18b and while Greenberg tried to sound upbeat, there can be little doubt that lingering consumer concern will affect the second quarter as well.
McDonald's financials follow equally poor results from Burger King, announced in April, in which operating profits were down 7% to US$143.5m.
John Dasburg, the new chief executive of Burger King has begun his task of readying the company for sale by removing a layer of management in the form of Mikel Durham, head of the North America operation.
"I have eliminated a layer between me and the US operations. I am centralising and therefore eliminating the North American division," Dasburg said.
North America accounts for 85% of Burger King's business and had been a separate unit within the company.
Parent company Diageo announced last summer it wanted to sell off Burger King and last week Dasburg admitted he had held discussions with Texas Pacific Group, a leveraged buyout firm.
by Sara Guild