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McDonald's Sales Rise as New Items Boost Europe to US

Friday, 08 November 2013 09:51 AM

McDonald’s Corp., the world’s largest restaurant chain, said sales at stores open at least 13 months rose 0.5 percent in October as new items boosted sales in Europe and the U.S.

Analysts estimated a 0.2 percent increase, the average of 10 estimates according to Consensus Metrix. Growth in Europe was 0.8 percent, Oak Brook, Illinois-based McDonald’s said in a statement, exceeding analysts’ projected 0.2 percent gain.

Chief Executive Officer Don Thompson has been overhauling McDonald’s menu worldwide. In Europe, where the company gets about 40 percent of its revenue, McDonald’s has advertised new and value items, such as different smoothie and McCafe coffee drink flavors in the U.K. At its domestic locations, McDonald’s also is promoting new fare, including chicken wings and pumpkin-spice lattes.

“They’ve added some more premium-type products,” Darren Tristano, executive vice president at restaurant researcher Technomic Inc. in Chicago, said in a telephone interview. “And when you compare them to other fast-food restaurants, that I think is going to help them lift their brand.”

McDonald’s was little changed at $97.17 at 8:43 a.m. in New York. The shares advanced 10 percent this year through yesterday, while the Standard & Poor’s 500 Restaurants Index gained 22 percent.

Same-store sales rose 0.2 percent last month in the U.S. Analysts projected a 0.4 percent gain, on average.

Falling Confidence

U.S. confidence fell to a 10-month low in October as the reopening of the federal government failed to reassure Americans. The Thomson Reuters/University of Michigan final index of consumer sentiment dropped to 73.2 last month, the weakest this year, from 77.5 in September.

Fast-food chains are locked in a battle to attract U.S. consumers. While McDonald’s has rolled out a $2 barbecue ranch burger this month, Burger King Worldwide Inc. recently started selling a barbecue rib sandwich and lower-fat fries. Wendy’s Co. is advertising pretzel buns.

McDonald’s, which gets about one-third of revenue from the U.S., is revamping its Dollar Menu to include a $2 burger and chicken sandwiches. The chain is facing pressure from its domestic store owners who have met to discuss higher costs, including rents, and the increasingly difficult economics of selling food for $1.

Asia Sales

Same-store sales fell 2.8 percent in the company’s Asia Pacific, Middle East and Africa region, the fourth straight monthly decline. Analysts estimated a 1.7 percent drop, according to Consensus Metrix, a researcher owned by Kaul Advisory Group in Wayne, New Jersey.

“Consumer sentiment is very cautious” in China, and people there are dining out more at local chains, Thompson said on a conference call last month. Same-stores sales in Japan slumped 9.7 percent in October.

Global comparable-store sales fell 0.1 percent in September and rose 1.9 percent in August.

Comparable-store sales are considered an indicator of a company’s growth because they include only the older, established locations. McDonald’s has more than 34,900 restaurants worldwide.

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McDonald's Corp., the world's largest restaurant chain, said sales at stores open at least 13 months rose 0.5 percent in October as new items boosted sales in Europe and the U.S.
Friday, 08 November 2013 09:51 AM
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