Possible Recession Bites Fast Food Nation
McDonald's reported flat sales for December.
Jan. 29, 2008 — -- The fast food industry is known as being recession-resistant, but the slowing U.S. economy has taken a bite out of the world's largest restaurant chain's profits.
McDonald's announced Monday that its December sales were flat as one of its beef patties and that it was the worst monthly result reported in nearly five years.
"McDonald's and other fast food chains are usually the last things to be affected by a recession," said economist Matthew Bishop. "If we see another bad month in January then it means it isn't the weather. I think it means it's the economy and we really are in trouble."
The report was a surprise in a nation where 25 percent of the U.S. population eats fast food daily, gobbling up $120 billion annually, according to the book "Fast Food Nation." That adds up to 35 million pounds of fat from Big Macs alone.
McDonald's cited cold weather, higher food costs and a slowdown in consumer spending tied to the declining housing market for its slower sales.
Higher energy costs also are on the menu.
"In the case of McDonald's, where a lot of teenagers frequent the establishment, high gasoline prices could be a factor," said Deutsche Bank chief economist Joe Lavorgna.
The golden arches' rivals also have experienced trouble. Wendy's, Burger King, KFC and Pizza Hut and the entire fast food sector took a major hit after the announcement.
Still, given the strong demand for McDonald's overseas, executives said they remain upbeat. The company announced plans to open 125 to 150 new outlets in China in 2009, where competition among fast food retailers has heated up. McDonald's already has 800 locations across the country.
McDonald's expects to maintain 15 percent annual growth there, according to The Associated Press.
In the United States, the fast food giant is counting on warmer weather and a new $1 menu to beef up sales.
Related Stories
ABC News Live