Thursday, 25 July 2013

McDonalds talks down Australian economy and tells whoppers to save face as sales fall

Reuters 22 July 2013:

The world's biggest restaurant chain by sales reported a lower-than-expected quarterly profit and said it expects global same-restaurant sales in July to be relatively flat, sending its shares down almost 3 percent in midday trading.

Camden Haven Courier 24 July 2013:

McDonald's, the world's biggest fast-food chain, says sales in Australia are going backwards, citing incorrect figures on the level of youth unemployment to help explain why fewer people are buying its burgers and fries.
Although the introduction of the "Loose Change" menu in 2012 bolstered sales of its food last year, thrifty consumers have withdrawn from even that bargain basement offer and are spending less at the McDonald's counter.
Addressing investors in the US, McDonald's global chief executive and president Don Thompson warned that lower levels of spending in Australia and cut-throat competition among fast-food chains in the region had slashed revenue for the company.
He told the mostly US audience that the economy in Australia had worsened since 2012 and is reported to have said that youth unemployment had hit more than 25 per cent…..

So has Australia's youth unemployment hit more than 25 per cent as Don Thompson asserts?
This is what the International Labour Organisation's report Global Employment Trends For Youth 2013 states:

The weakening of the global recovery in 2012 and 2013 has further aggravated the youth jobs crisis and the queues for available jobs have become longer and longer for some unfortunate young jobseekers. So long, in fact, that many youth are giving up on the job search. The prolonged jobs crisis also forces the current generation of youth to be less selective about the type of job they are prepared to accept, a tendency that was already evident before the crisis. Increasing numbers of youth are now turning to available part time jobs or find themselves stuck in temporary employment. Secure jobs, which were once the norm for previous generations - at least in the advanced economies - have become less easily accessible for today’s youth. The global youth unemployment rate, estimated at 12.6 per cent in 2013,is close to its crisis peak. 73 million young people are estimated to be unemployed in 2013. At the same time, informal employment among young people remains pervasive and transitions to decent work are slow and difficult. The economic and social costs of unemployment, long‐term unemployment, discouragement and widespread low‐quality jobs for young people continue to rise and undermine economies’ growth potential… Since 2009, little progress has been made in reducing youth unemployment in the Developed Economies and European Union as a whole. The youth unemployment rate in 2012 is estimated at 18.1 per cent, the same rate as in 2010 and the highest level in this region in the past two decades. If the 3.1 per cent discouragement rate is taken into account, the discouragement adjusted youth unemployment rate becomes 21.2 per cent. The youth unemployment rate is projected to remain above 17 per cent until 2015, and decrease to 15.9 per cent by 2018….. Regional youth unemployment rates show large variations. In 2012, youth unemployment rates were highest in the Middle East and North Africa, at 28.3 per cent and 23.7 per cent, respectively, and lowest in East Asia (9.5 per cent) and South Asia (9.3 per cent). Between 2011 and 2012, regional youth unemployment rates increased in all regions except in Central and South‐Eastern Europe (non‐EU) and Commonwealth of Independent States (CIS), Latin America and the Caribbean, and South‐East Asia and the Pacific. Encouraging trends of youth unemployment are observed in, for example, Azerbaijan, Indonesia and the Philippines......

In June 2013 Forbes, The Centre for American Progress and Armstrong Economics were reported that youth unemployment in the USA has hit 16.2 per cent.

While the Australian Bureau of Statistics's 6202.0 Labour Force Australia states that in June 2013 the unemployment rate for people looking for full-time work in the 15-24 year old age group was 11.2 per cent and the unemployment rate for those looking for part-time work in that age group was 11.7 per cent. Australia's overall unemployment rate is currently 5.7 per cent.

So it seems that Mr. Thompson might be searching just a little to hard for excuses and, if he were to look at McDonalds history in Australia of poor workplace practices and equally poor corporate behaviour he might find the real answer as to why its 'burger and fries' sales are falling in this country.


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