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.
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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.
McDonald's global sales at restaurants open at least 13 months rose 1.9 percent, the first gain of less than 2 percent since the second quarter of 2003. Analysts polled by Consensus Metrix expected a 2 percent increase.
The sluggish U.S. economy and Europe's belt-tightening are squeezing even the most resilient restaurant operators, as diners spend cautiously.
Tougher comparisons, particularly in the United States, will likely weigh on comparable-sales trends from the fourth quarter of 2012 through the second quarter of 2013, said Janney analyst Mark Kalinowski, who has a "neutral" rating on McDonald's.
Income at McDonald's fell to $1.46 billion, or $1.43 per share, in the third quarter, from $1.51 billion, or $1.45 per share, a year earlier.
Analysts, on average, expected McDonald's to earn $1.47 per share, according to Thomson Reuters I/B/E/S.
The impact of the stronger dollar, which lessens the value of sales overseas for U.S. companies, trimmed earnings by 8 cents per share.
Total sales slipped 0.2 percent to $7.15 billion.
During September, comparable sales were up 0.7 percent in the United States, 3 percent in Europe and 0.1 percent for the Asia/Pacific, Middle East and Africa (APMEA) region.
While the results from the United States and APMEA region disappointed Wall Street, Europe handily topped expectations, according to Consensus Metrix.
McDonald's has focused on value items in Europe, which just tops the United States as the company's top market for sales. The effort helped it serve up the better-than-expected results, despite a drop in traffic, analysts said.
Lazard Capital Markets analyst Matthew DiFrisco said he wants to hear more about the "increasingly competitive environment" in the U.S. and what pushed traffic to restaurants down in Europe and led to the weakness in Japan.
Still, he rated McDonald's stock as "buy," calling it the best-positioned restaurant chain to gain share with its strong brand equity, marketing, contemporary stores and value prices. (Additional reporting by Brad Dorfman in Chicago; Editing by Gerald E. McCormick, Dale Hudson and Jeffrey Benkoe)