McDonald's (MCD) guests are disappearing. Not all at once obviously, but it is undeniably happening. And that is the core problem McDonald's has to solve.
The numbers make it clear that the consistent growth in the number of transactions at McDonald's stores, a regular occurrence for years, is no more. The first chart below goes back to 2009, but for half a decade prior to that, McDonald's recorded positive changes in year-over-year traffic numbers. That ended in 2013, when guest counts fell 1.9%. At each interval this year -- the end of the first quarter, the halfway point and after nine months -- the decline has continued.
Comparable guest counts factor in all restaurants, whether owned by the company or by franchisees. The latter are the majority of the McDonald's system.
There are many reasons to point to. For some diners, it's pricing, as the Oak Brook, Ill., company has lifted prices over time, again and again. Inflation happens, yet one of McDonald's key drivers is affordability. As a recent Bloomberg article detailed, there's no doubt wallet concerns are sending some consumers elsewhere.
Heightened competition, whether from similar chains or the fast-casual restaurants, is another factor. The constant coverage around obesity and the "healthfulness" of fast food has a role. Global incidents have an impact: In China, a supply scandal over the summer hurt Asian results and probably will for a few more months.
Multiple issues are involved, but the concern is that most of them won't be going away very soon. Same-store sales, which measure the transactions being conducted, as well as the amount of money spent during visits to stores at least 13 months old, have suffered tremendously amid the traffic drop. From 2009 through 2012, all was well, as the red measurements added to the second chart, alongside guest counts, indicate. The last two years, in contrast, have been dreadful.
Were it not for higher prices being paid at the counter, comparable sales wouldn't even be at this level. The green lines added to the third chart, with transaction counts and same-store sales, illustrate this. These lines represent the implied increase in the average check at each interval back to 2009, based on same-store sales and the change in the number of transactions detailed by McDonald's. While these findings aren't official, they do provide a guide of how reliant on pricing McDonald's has gotten to keep comp-store revenue at least flat.
Average check is determined from price changes for the same items over time and customers choosing costlier menu items, though McDonald's notes that, generally, "pricing has a greater impact on average check than product mix."