OAK BROOK, Ill. McDonald's (MCD) says third-quarter net income fell nearly 4 percent as the stronger dollar hurt international results and the chain faced tough competition in the U.S.
The world's largest hamburger chain with 33,000 locations worldwide has thrived in boom and bust times by selling cheap eats and constantly updating its menu. But global economic pressures and intensifying competition is wearing at the company, which makes two-thirds of its sales overseas.
CEO Don Thompson said those trends are likely to continue to pressure its revenue and net income results in the near term. He said revenue in stores open at least 13 months, a key restaurant metric, is trending negative so far in October.
Shares fell $2.61, or 2.8 percent, to $90.25 in premarket trading
McDonald's said Friday its net income fell to $1.46 billion, or $1.43 per share. That compares with net income of $1.51 billion, or $1.45 per share last year. Analysts expected net income of $1.47 per share, according to Fact Set.
The stronger dollar hurt net income by 8 cents per share. When the dollar is strong, international sales translate into fewer dollars back at home.
Revenue was nearly flat at $7.15 billion from $7.17 billion last year. Analysts expected revenue of $7.17 billion.
Revenue in stores open at least 13 months rose 1.9 percent globally, including a 1.2 percent rise in the U.S., where the company said it faced "broad competitive activity."
McDonald's is facing stiffer competition from newer chains like Panera Bread Co., which offers higher-end food in a fast casual atmosphere. Long-time rivals such as Wendy's Inc. and Burger King Worldwide Inc. are also reworking their menus, renovating restaurants and launching new ad campaigns to win back customers.
In Europe, where McDonald's does 40 percent of its business, revenue in stores open at least 13 months rose 1.8 percent, hurt by negative guest traffic.
In Asia/Pacific, the Middle East and Africa, the measure rose 1.4 percent as the company promoted limited-time offers and traffic increased.