McDonald’s sales up 0.7% as beefed-up breakfast lures diners
Analysts projected a 0.4% gain, the average of 15 estimates compiled by Consensus Metrix.
Same-store sales in the US rose 1.6%, the Oak Brook, Illinois-based company said in a statement. Analysts had projected a 0.3% increase.
The 34,700-restaurant chain has introduced new menu items in the US this year, including chicken wraps and egg-white breakfast sandwiches, to compete with Wendy’s and Burger King Worldwide, which are rolling out new food.
McDonald’s is also advertising its Dollar Menu in the US and combo meals in France and Germany, its largest European markets, to attract cash-strapped consumers.
“Their breakfast business has been strong,” and the egg-white sandwich probably helped boost July sales, Peter Saleh, a New York-based analyst at Telsey Advisory Group said.
“As the economy improves and you get job growth, more and more people are now driving to work and so they tend to go through the drive-thru.”
McDonald’s rose 0.7% to $99 (€74) in New York immediately after the announcement last week.
The shares climbed 11% this year, while the Standard & Poor’s 500 Restaurants Index gained 18%.
The US economy grew more than projected in the second quarter, showing the country may be overcoming higher taxes and cuts in government spending.
Consumer spending also is increasing, which may be helping McDonald’s sell more burgers. US spending rose 1.8% during the second quarter, topping estimates.
Same-store sales fell 1.9% in both Europe and the company’s Asia Pacific, the Middle East and Africa region. Analysts projected a 0.3% increase and 0.3% drop, respectively, according to Consensus Metrix, a researcher owned by Kaul Advisory Group in Wayne, New Jersey.
Comparable-store sales are considered an indicator of a company’s growth because they only include older, established locations.
July store sales fell in Germany and France, where McDonald’s has about 2,700 stores.
The chain is “going to face some tough economies around the world,” CEO Don Thompson said on Jul 22 during a conference call.
“Based on our recent sales trends, our results for the rest of the year are expected to remain challenged.”
McDonald’s, which gets about 40% of its revenue from Europe, has advertised €4.50 baguette sandwich and drink combos in France to attract diners.
In Germany, the chain is promoting new snack salads and wraps with arugula and couscous, along with value meals.
About 19% of McDonald’s locations worldwide are owned by the company.
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