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McDonald's sales decline as chain looks to adapt to changing tastes

NEW YORK, N.Y. - McDonald's is fighting to hold onto customers in the U.S. — and all that snow didn't help.

The world's biggest hamburger chain said Monday that sales fell 1.4 per cent at established U.S. locations. It blamed the harsh winter weather, but conceded that "challenging industry dynamics" also played a role.

After years of outperforming its rivals, McDonald's has been struggling to boost sales as people flock to places like Chipotle and Five Guys Burgers and Fries. Those chains have popped up quickly across the country by positioning themselves as a step up from traditional fast food in terms of quality, for a little extra money. They also offer greater customization, meaning diners can dictate exactly what toppings they want.

Executives at McDonald's Corp., based in Oak Brook, Ill., acknowledge Americans' changing demands when it comes to fast food.

"A long time ago, mass appeal had to be mass appeal," Jeff Stratton, the president of McDonald's USA, said in an interview with The Associated Press last month. "That's not necessarily the case anymore today."

So the company's restaurants are adapting to a world where McDonald's traditional strength — consistency — isn't always enough. For example, McDonald's is rolling out new prep tables that can hold more toppings and sauces, a sign that it plans to give customers greater variety.

In Southern California, the company is even testing a "build-your-own-burger" concept that lets people use tablets to tap out the bread, cheese and other toppings they want on their burgers. Executives say results are promising so far, but rolling out the offering across its more than 14,000 U.S. locations would require considerable changes to its kitchens.

It would also need the backing of the independent franchisees that own and operate the majority of its restaurants in the U.S.

In the meantime, McDonald's has made other changes to its menu, including the option to get egg whites in breakfast sandwiches, and the addition of chicken McWraps, which are intended to appeal to people who want fresher, healthier food.

Globally, McDonald's said sales declined 0.3 per cent at locations open at least 13 months in February. It warned that its muted performance so far this year could hurt first-quarter profit margins.

In region encompassing the Middle East, Africa and Asia, sales declined 2.6 per cent. The company cited weakness in Japan and Australia, as well as a shift in the timing of the Chinese New Year.

Europe was a relative bright spot, with sales up 0.6 per cent on a strong performance in the U.K. and growth in France.

McDonald's has more than 35,000 locations in more than 100 countries.

Its stock shed 31 cents to $95.19 in morning trading.

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Follow Candice Choi at www.twitter.com/candicechoi

The Canadian Press


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