McDonald's sales growth weakens

McDonald's Corp missed profit expectations for the second quarter in a row as sales at established restaurants grew at their slowest pace in more than nine years because of a weak global economy and stepped-up competition.

The world's biggest fast food chain also said on Friday that sales at existing restaurants have fallen so far this month.

Shares of McDonald's were down 3.3 percent to $89.75 in early Friday trading.

The results landed a day after Chipotle Mexican Grill Inc forecast decelerating same-restaurant sales for 2013, signaling its days of torrid growth may be over.

Government and restaurant data showed restaurant trends decelerated in September, Bernstein Research analyst Sara Senatore said.

I think the conclusion is that demand is slow in the United States, Senatore said. You have a scenario where the overall pie is shrinking and companies are competing aggressively to take their piece of it.

Fast-food chains such as Burger King Worldwide Inc, the Wendy's Co and Yum Brand Inc's Taco Bell, have overhauled menus to compete with McDonald's and benefited from lower commodity costs, which have helped them to lower prices, Morningstar analyst R.J. Hottovy said.

Competition has certainly gotten more aggressive the past several quarters, said Hottovy, w ho described the environment as cutthroat.

McDonald's has beefed up advertising to try to fend off the resurgent rivals, and analysts expect its size and management prowess will work to the company's advantage.

This chain will just have to grind through this. We're confident they can do this with their brand power and their advertising budget, Edward Jones analyst Jack Russo said.

Shares in other restaurant operators also fell on Friday. Chipotle shed 14 percent to $246.10, its lowest level in well over a year. Yum Brands was off 1.8 percent to $70.78, and Starbucks Corp sank 3.8 percent to $45.62.

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