McDonald's begins fightback

26 September 2002 by
McDonald's begins fightback

McDonald's, faced with sluggish sales and a slew of bad publicity in the USA, is fighting back with cheaper prices and revamped stores.

The chain last week lowered its 2002 earnings forecast and expects sales growth in the low single digits this year. In the year to August, worldwide sales grew by 2% to $27.7b (£17.8b).

Out of favour with Wall Street, McDonald's shares hit a seven-year low last week, and analysts have been raising concerns about its plans for revival.

These include a nationwide dollar-item menu, plus a $300m-$400m (£193m-£257m) programme to refit stores and improve service. Under consideration are red roofs, simpler menu boards and staff outside taking drive-through orders.

The $1 menu, launched next week, will price eight items at a dollar. But rival Burger King has beaten McDonald's to it with a chain-wide promotion last week listing 11 items at 99¢.

McDonald's also faces a lawsuit by two teenagers who say its food made them fat and gave them health problems. It also paid out $10m (£6.4m) to settle a claim that it marketed certain foods as vegetarian when they were made with beef-flavoured oil.

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