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UPDATE 3-McDonald's gets fewer visits in quarter, expects weak January

Lisa Baertlein
Thursday, 23 Jan 2014 | 11:29 AM ET

(Rewrites, adds comment, context, graphics, share price)

Jan 23 (Reuters) - McDonald's Corp reported weaker-than-expected quarterly sales at established restaurants on Thursday as fewer diners frequented the fast-food chain, and warned that sales would again fall short of analysts' expectations in January.

The world's biggest restaurant chain by revenue has reported disappointing sales for five straight quarters, hurt by self-inflicted operational stumbles, weak demand and intense competition from rivals such as Wendy's Co and Burger King Worldwide Inc.

Indeed, efforts by Chief Executive Don Thompson to shore up earnings in the 18 months since he took the top job at the company - by tweaking menus and changing management - have not borne fruit.

The pressure is on him to boost McDonald's share price as well. The stock is up just 7 percent since Thompson became chief executive on July 1, 2012, well behind the 27-percent jump in the Dow Jones Industrial Average index, of which McDonald's is a component.

"The easy answer is to find a killer product - but that's easier said than done," Bernstein Research analyst Sara Senatore said.

Global sales at McDonald's restaurants open at least 13 months fell 0.1 percent during the fourth quarter, due in part to severe winter weather in the United States.

Quarterly results were overshadowed by McDonald's forecast for "relatively flat" January global sales at restaurants open at least 13 months.

The January forecast "stands out as a healthy (same-store sales) miss," Wells Fargo restaurant analyst Jeff Farmer said in a client note. He and other analysts estimate a 2.4 percent gain in January.

Analysts were optimistic that McDonald's sales trends would improve in January, largely because the company turned in lukewarm results in January 2013.

McDonald's has about seven times the sales of Wendy's and Burger King combined, but has had less success than those rivals in tempting diners with limited-time specials and promotions.

New menu items, in particular lattes, smoothies, salads and wraps, have slowed McDonald's service in a business where hyper-competitive drive-thru times are measured in seconds.

McDonald's also switched its value-oriented "Dollar Menu" to the "Dollar Menu & More" in November with slightly higher prices. The program, despite heavy marketing, didn't draw customers.

Closely watched global same-restaurant sales in December were down 1.2 percent, versus a 0.6 percent gain expected by analysts polled by Consensus Metrix.

The 3.8 percent drop in the United States was the biggest shortfall - analysts expected a decline of just 0.6 percent - but other regions also missed.

The Asia Pacific, the Middle East and Africa (APMEA) region posted an unexpected 2.1 percent decline and Europe's 0.5 percent gain was about half what analysts expected.

Fourth-quarter net income was flat at $1.40 billion, or $1.40 per share.

Total revenue for the company, known for its crispy french fries and Big Mac hamburgers, grew 2 percent to $7.09 billion.

Analysts on average were expecting the company to earn $1.39 per share on revenue of $7.11 billion, according to Thomson Reuters I/B/E/S.

Still, shares ticked up 0.4 percent to $95.24 in morning trading.

(Reporting by Siddharth Cavale in Bangalore and Lisa Baertlein in Los Angeles; Editing by Joyjeet Das, Jilian Mincer and Bernadette Baum)

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