McDonald's same-store sales jump in November
Monday December 8, 2:42 pm ET
By Lauren Shepherd, AP Business Writer
McDonald's global same-store sales rise 7.7 percent in November, US sales rise 4.5 percent
NEW YORK (AP) -- Consumers hungry for cheap meals boosted worldwide sales at McDonald's Corp.'s established locations by 7.7 percent in November, more proof of how the fast-food leader is thriving in a downturn that has eaten into sales at its competitors.
Even recession-weary consumers in the U.S. were enticed by the Golden Arches during the month. U.S. same-store sales -- or sales at locations open at least a year -- rose 4.5 percent from the same month a year earlier, the company said Monday.
The Oak Brook, Ill.-based chain said the increase came from strong sales of breakfast items, chicken sandwiches and the chain's value menu options. It comes even as U.S. consumers increasingly opt for eating at home to conserve cash.
"I think what you're seeing is that McDonald's has so far been relatively immune to the recession," said David Morris, senior analyst at consumer research firm Mintel.
The past few months have been difficult ones for the restaurant industry as the now yearlong recession deepened. Restaurants have seen traffic decline traffic as consumers curb their spending, and have faced higher ingredient costs that have shrunk margins.
McDonald's has largely been able to keep its profits intact despite the higher costs. But the chain has had to make changes to its menu to protect its margins, including raising the price of its popular Double Cheeseburger and replacing the sandwich on the Dollar Menu with a new double burger that has one slice of cheese instead of two.
Although the November sales exceeded most analysts' expectations, the rise was slightly lower than the 8.2 percent increase in global same-store sales that the company in October.
Morningstar analyst John Owens said the company had a higher baseline to overcome in November, since sales had gained so much a year ago during that month. Same-store sales jumped 8.2 percent worldwide in November last year. In October of 2007, same-store sales rose 6.9 percent.
Same-store sales are a key indicator of restaurant performance since they measure sales at existing locations rather than newly opened ones.
Morris noted that McDonald's positioned itself well even before the economy took a turn for the worse by adding healthier options and enhancing the quality of its food. Those changes have helped the chain expand its sales ahead of the rest of the industry for months by helping to make the chain more palatable to consumers looking for good food at lower prices.
Total sales worldwide for the month ending Nov. 30 rose 1.9 percent. The increase would have been higher but a stronger dollar ate into gains. McDonald's, like other U.S. companies that operate overseas, translates its revenue from other currencies into dollars, so a stronger dollar can hurt revenue. Excluding currency effects, worldwide sales climbed nearly 10 percent.
McDonald's shares fell $1.92, or 3 percent, to $60.80 in afternoon trading after rising slightly earlier in the day. Owens said some investors may have been disappointed to see the worldwide sales be affected so much by a stronger dollar.
International same-store sales were strong, rising 7.8 percent in Europe and 13.2 percent in the Asia/Pacific, Middle East and Africa division. Overseas sales gains came from the chain's open early and close late -- if at all -- mantra and its breakfast menu.
"Convenient locations, extended hours and quality food at an outstanding value are all reasons why people are choosing McDonald's," said Chief Executive Jim Skinner.
McDonald's has been focusing on staying open longer to gain customers during the late-night and early morning hours. The company has also added Southern Style chicken sandwiches and breakfast biscuits as well as espresso-based lattes and other drinks in a bid to gain more customers. The espresso drinks -- called McCafe -- are now being added to the menu at McDonald's locations across the U.S. Many European locations already offer them.
Stifel Nicolaus analyst Steve West said in a note to investors that the results for the month beat his expectations of a 3 percent to 4 percent increase worldwide.
West, who has a "Buy" rating on the stock and a $70 target price, noted that the U.S. boost proved "the Arches are still golden even in a recession."
But Owens said McDonald's may be becoming a victim of its own success, since investors expect phenomenal gains each month.
"The expectations for the company are very, very high," he said.
Monday December 8, 2:42 pm ET
By Lauren Shepherd, AP Business Writer
McDonald's global same-store sales rise 7.7 percent in November, US sales rise 4.5 percent
NEW YORK (AP) -- Consumers hungry for cheap meals boosted worldwide sales at McDonald's Corp.'s established locations by 7.7 percent in November, more proof of how the fast-food leader is thriving in a downturn that has eaten into sales at its competitors.
Even recession-weary consumers in the U.S. were enticed by the Golden Arches during the month. U.S. same-store sales -- or sales at locations open at least a year -- rose 4.5 percent from the same month a year earlier, the company said Monday.
The Oak Brook, Ill.-based chain said the increase came from strong sales of breakfast items, chicken sandwiches and the chain's value menu options. It comes even as U.S. consumers increasingly opt for eating at home to conserve cash.
"I think what you're seeing is that McDonald's has so far been relatively immune to the recession," said David Morris, senior analyst at consumer research firm Mintel.
The past few months have been difficult ones for the restaurant industry as the now yearlong recession deepened. Restaurants have seen traffic decline traffic as consumers curb their spending, and have faced higher ingredient costs that have shrunk margins.
McDonald's has largely been able to keep its profits intact despite the higher costs. But the chain has had to make changes to its menu to protect its margins, including raising the price of its popular Double Cheeseburger and replacing the sandwich on the Dollar Menu with a new double burger that has one slice of cheese instead of two.
Although the November sales exceeded most analysts' expectations, the rise was slightly lower than the 8.2 percent increase in global same-store sales that the company in October.
Morningstar analyst John Owens said the company had a higher baseline to overcome in November, since sales had gained so much a year ago during that month. Same-store sales jumped 8.2 percent worldwide in November last year. In October of 2007, same-store sales rose 6.9 percent.
Same-store sales are a key indicator of restaurant performance since they measure sales at existing locations rather than newly opened ones.
Morris noted that McDonald's positioned itself well even before the economy took a turn for the worse by adding healthier options and enhancing the quality of its food. Those changes have helped the chain expand its sales ahead of the rest of the industry for months by helping to make the chain more palatable to consumers looking for good food at lower prices.
Total sales worldwide for the month ending Nov. 30 rose 1.9 percent. The increase would have been higher but a stronger dollar ate into gains. McDonald's, like other U.S. companies that operate overseas, translates its revenue from other currencies into dollars, so a stronger dollar can hurt revenue. Excluding currency effects, worldwide sales climbed nearly 10 percent.
McDonald's shares fell $1.92, or 3 percent, to $60.80 in afternoon trading after rising slightly earlier in the day. Owens said some investors may have been disappointed to see the worldwide sales be affected so much by a stronger dollar.
International same-store sales were strong, rising 7.8 percent in Europe and 13.2 percent in the Asia/Pacific, Middle East and Africa division. Overseas sales gains came from the chain's open early and close late -- if at all -- mantra and its breakfast menu.
"Convenient locations, extended hours and quality food at an outstanding value are all reasons why people are choosing McDonald's," said Chief Executive Jim Skinner.
McDonald's has been focusing on staying open longer to gain customers during the late-night and early morning hours. The company has also added Southern Style chicken sandwiches and breakfast biscuits as well as espresso-based lattes and other drinks in a bid to gain more customers. The espresso drinks -- called McCafe -- are now being added to the menu at McDonald's locations across the U.S. Many European locations already offer them.
Stifel Nicolaus analyst Steve West said in a note to investors that the results for the month beat his expectations of a 3 percent to 4 percent increase worldwide.
West, who has a "Buy" rating on the stock and a $70 target price, noted that the U.S. boost proved "the Arches are still golden even in a recession."
But Owens said McDonald's may be becoming a victim of its own success, since investors expect phenomenal gains each month.
"The expectations for the company are very, very high," he said.
13 comments:
I believe every word and I am not surprisedat all. I eat at McDonalds very often for the simple reason that it is cheap and i like the food despite the fact that the food is very unhealthy. I see why McDonalds is doing fine at this point not that it is good but it is true.
Wow, I really enjoyed this article. With utility costs rising along side the troubled economy, it is reasonable that people are attracted to cheaper, yet eatable food. McDonald's is a perfect example of the troubled economy. People are not going to spend as much on food as they did 10 years ago. Businesses like Taco Bell, Pizza Hut, and McDonald's have seen a rise in their profit margin with the troubled economy. I believe as long as the economy is in recession, people are going to go top places like McDonald's. Also McDonald's has much to offer: quick service, eatable food, and a newer health conscious program. As for the kids in the picture, they really need to consider going for the salads.
I really find this amusing, I mean America is the only obese nation in the entire world. People may argue it's because America is a more developed nation than others, but look at Europe? And China is getting there - but we're not anywhere near size XXXXXL shirts.
Maybe when Americans realize that home-cooked meals are cheaper and healthier the waistline of the average American will reduce greatly.
When you really think about it, it is much cheaper to eat healthly and at home. In the long run what you eat at mcdonaldsyou will gain wait and when you gain enough weight there is a big health risk. So all that money that you "saved" from eating at McDonalds will go to bills from doctor's and denist and hospitals. So really Mcdonalds is just a long term spending plan.It is much cheaper and healthier to eat at home.
If you ask me, I would think that McDonalds is probably the smartest food chain in America. They know how to get people to buy food from them even if we are in a recession. Even if McDonalds isn't the best food, and it is definitely not good for you, I don't know how someone could turn down the good prices. All this means is McDonalds has used Americas stupidity and weakness for food to get to the top.
I truly hate McDoodles in every single way possible.
And the fact that its sales are more or less unhindered by the recession only makes me hate it more.
I just really wish that something awful would happen that would somehow force McDoodles to close. I believe the world would be a much better place without it.
I think that this is because the amount of McDonald's available to people. The sheer amount of McDonalds and other fast food "restraunts" is a perfect example of this. When there is eatable food in large amounts that is cheap and VERY fast, why wouldn't someone buy it? Even just eating lunch off campus, I can order my food, and before I even get my change, they will have the food ready. When you have 5 children to feed, with only about 30 minutes, where are you going to go? Home where it would take about 15 minutes to cook a decent meal that the kids might like, or to a McDonalds where you KNOW they will like it, and it only take 5 minutes to get the food out to them.
I love McDonald's, but there not the healthiest choice but there very cheap, and i can see why there doing great. There cheap and there foods great. But then on the other hand their food is very unhealthy. They do try to make healthy foods but its hard to sell it when you have a variety of unhealthy choices that taste really good. And with obesity rising, for what ever reason as long as the economy is in recession people are still going to eat at cheap places that are unhealthy for you.
that somehow makes all sense. The slow downfall of the economy makes the uprise of the dollar menu. I understand that if people are depressed they eat, but this is ridiculous. Now i understand the reason why there has been a slow rise in the development of golden arches and such. Now what I'm afraid of is that if McDonalds raises their prices, then they will too start to go to a recession. I give thumbs up to McDonalds for gaining more money in an economic recession.
I kind of thought with the failing economy, people wouldn't become as fat because they wouldn't be able to dine out as frequently, but I think McDonald's found a nice loophole.
I guess the U.S. will be turning even more into a Fast Food Nation
Today's life is a chaotic mess. Filled with work for parents, school for kids, and many additional things through out the day. Parents are tired and want an easy, cheap way out of making dinner. McDonalds has come to be among the leading popular choices. Parents need to realize that buying groceries and cooking meals at home is a lot cheaper than buying fast-food, like McDonalds, everyday. Not only is it cheaper but it is also healthier and better for the entire family. We would not only be teaching our kids how to save money and but also how to live a healthy life.
Of course McDonalds is still making tons of money, they only invented the dollar menu which plenty of American kids are raised on. McDonalds is affordable even for the poorest of Americans and their food is supposed to be healthier with the changes to the menu. First of all, just because McDonald's food is supposed to be healthier does not mean that it is actually healthy. It's totally understandable that many people across the globe are feeling tight on money, so they cut costs in the places of their budget that they could. As a matter of fact, I have recently felt the urge to munch on some Mickie D's due to my budget and I don’t plant to stray away from it.
I really hate McDonald's and I think it's sad that the recession hasn't really affected their sales. Even though the economy is in trouble right now, there are other places to eat and different ways of saving money than eating at places like McDonald's.
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