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Wednesday, July 25, 2012

McDonalds growth down in Australia

McDonalds growth in Australia has been sliced in half.  The newly appointed Chief Executive, Don Thompson has been talking to US investors about how Australia is suffering from a lack of consumer confidence and what he's doing to try and fix it.  In March this year, McDonalds introduced their "Loose Change" menu which seems to be working well.

-Double Cheeseburger $2
-Chicken 'n' Cheese $2
-10 Pack McBites $2
-Garden Salad $2
-Small Fries $1
-Small Soft Drink $1
-Soft Serve Cone 30c

We know that many restaurants are failing as the cost of living bites hard, but it's a surprise to learn that some people have stopped buying their Happy Meals. At the release of the chain's second-quarter earnings, Mr Thompson said "Across this region, we are seeing fragile consumer confidence in Australia, Japan's uneven recovery and an economic downturn in China."

We have good reason to hang onto our money.  It's likely that Australia is headed for a recession and many believe we are already in the midst of one right now.   China's economy is slowing and Europe cannot possibly continue to borrow more and more money to stay afloat, it will all end in tears, one way or the other, and there is no doubt we will be affected by the fallout.

China's insatiable appetite for iron-ore allowed us to sail through the GFC but the golden years of the mining boom are almost over.  Household expenses, particularly electricity bills, have skyrocketed so badly that the Gillard government has put money in pensioner's bank accounts to compensate, and we are told there is worse to come.

The Reserve Bank Governor, who has earned a reputation of being a complete idiot, told us yesterday not to panic, we are doing just fine, but nobody believes him.  Nor does the American CE of McDonalds who said "We are positioning our market appropriately in this environment with strong value platforms to build traffic."