Forget China. McDonald’s big worry is the world’s largest economy, not the second largest. Yes, a scandal at the Shanghai facility of a key supplier has hurt: Asia-Pacific same store sales declined 7 per cent in July. But the fall at home in the US – where there was a 3 per cent drop – is a much bigger threat.
McDonald’s does not break out sales by country. It did say, however, that the markets involved in the scare – including China and Japan – affected a tenth of global sales, or something under $3bn. Even if China accounts for half of that, then the country is a relative small fry, with a sixth of US sales (rival Yum draws half of its sales from China).
McDonald’s domestic struggles are a bigger deal. Pressure is coming from old rivals such as the resurgent Burger King and new burger chains such as Five Guys. There are also more upscale entrants, such as Chipotle, which increased sales by a fifth in the second quarter; Burger King saw 6 per cent organic growth. Total sales at McDonald’s fell.