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Thursday, 23 January, 2003, 17:15 GMT
McDonald's posts first-ever loss
A McDonald's restaurant in Harrogate, UK
McDonald's has shut more than 700 restaurants
Burger giant McDonald's has reported its first ever quarterly loss after it was hit by the costs of closing hundreds of its restaurants

The world's largest restaurant chain posted a net loss of $344m (212m) for the October to December period, compared with a profit of $272m the year before.

It took a whopping $810m charge to cover job cuts, the exit from three Latin American markets and to pay for the closure of more than 700 restaurants, mainly in its two largest markets, Japan and the US.

McDonald's, which runs some 30,000 restaurants worldwide, has suffered from slow sales growth in the US, its largest market.

Fierce competition

The American fast-food market has become increasingly competitive as rivals such as Burger King, Wendy's and Taco Bell fight to maintain their market share.

McDonald's revenues for the quarter were up 2% at $3.9bn, but margins have been under pressure since the introduction of McDonald's 'Dollar Menu' which triggered a price war with rival Burger King.

In his first address to Wall Street last week, chief executive Jim Cantalupo said McDonald's would stick to the Dollar Menu although it could be adjusted.

He added that McDonald's would close more restaurants in the US and Japan this year.

The fourth-quarter net loss marks the eighth quarter of the past nine in which the burger giant's results have failed to live up to its year-earlier level.

Shares of McDonald's fell nearly 14% in the fourth quarter, while the Dow Jones edged up nearly 5% over that same period.

Investors were not impressed with the latest update, and the stock fell 43 cents to $14.93 in early New York trading on Thursday.

 WATCH/LISTEN
 ON THIS STORY
The BBC's Mark Gregory
"McDonalds' menu of big macs, fries and cola seems to be losing its appeal"
David Kolpak of Victory Capital
"McDonalds right now is suffering from a series of marketing mistakes"
See also:

17 Dec 02 | Business
05 Dec 02 | Business
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