McDonald’s (NYSE: MCD) is bracing itself to report a sales slowdown in July. That’s after the world’s biggest hamburger chain surprised Wall Street with weaker-than-expected second-quarter profits.
Don Thompson, McDonald’s new CEO, said “the environment has become more challenging,” reflecting the “slowing global economy and persistent economic headwinds.”
McDonald’s makes more money in Europe than anywhere else. Italy and Spain – where unemployment is soaring – were hit especially hard.
That’s simply because more consumers are eating at home, according to Jack Russo of Edward Jones:
“Consumers in general are just being pinched, they’re being frugal, they’re worried about their futures, worried if they have jobs about their job status. If they don’t have jobs, clearly that means they have to eat more at home.”
McDonald’s is the latest in a string of multinationals to get hurt by slower economies and a weaker dollar, says Jones:
“Coca-Cola, Philip Morris, also reporting that Europe overall is weaker. But predominantly the big-time pressure is in the Southern portion of Europe – Italy, Spain, Portugal.”
Analysts say these firms can either sit back and wait for Europe and the U.S. economy to get better. Or they can try to win more business and gain new market share. If they choose the latter, analysts say it should pay off next year when the dollar shouldn’t be nearly as big a problem as it’s been in 2012.