McDonald's sales climb 8.2 percent
GREENSBORO, North Carolina (Bloomberg) - McDonald's Corp., the world's largest restaurant company, said November sales rose 8.2 percent as an increase in burgers and chicken sandwiches in Europe bolstered revenue more than analysts estimated.
McDonald's jumped to a record in New York Stock Exchange composite trading. Sales at European restaurants open at least 13 months advanced 10.8 percent, while comparable revenue rose 4.4 percent in the US, Oak Brook, Illinois-based McDonald's said today in a statement. The median global sales estimate among three analysts surveyed by Bloomberg News was a five percent gain.
The hamburger chain's sales have increased for 55 straight months, the longest string in 27 years, spurred by demand for coffee after the company added a stronger blend in 2006 to compete with Starbucks Corp. McDonald's lengthened restaurant hours and extended its US discount menu and healthier chicken sandwiches to Germany, the UK and Australia.
The company is "able to compete with Starbucks, Dunkin' Donuts and some of the other really strong competitors," said Michael Vogelzang, who manages $2 billion including McDonald's shares as chief investment officer of Boston Advisors LLC in Boston. "They are changing the company overseas."
McDonald's gained $1.36, or 2.3 percent, to $61.52. The shares are headed for their fifth annual increase after rising 36 percent this year through December 7.
Sales in Asia, the Middle East and Africa rose 12 percent, spurred by breakfast sales in China as well as chicken sandwiches and wraps in Australia and Japan, Heidi Barker, a McDonald's spokeswoman, said yesterday.
In the US, 95 percent of McDonald's 13,800 restaurants operate with extended hours, up from 75 percent five years ago, said Danya Proud, a company spokeswoman. Outlets in Europe and Asia are also staying open longer.
"Lessons learned in the US also guide the international system's push toward extended hours," Matthew DiFrisco, a Thomas Weisel Partners analyst in New York, wrote in a November 27 note to clients. He recommends buying McDonald's stock.
US sales rose on chipotle-flavored snack wraps and cinnamon rolls introduced earlier this year, Ms. Barker said.
The company increased US coffee sales since introducing a new blend in February 2006 while expanding lattes, hot chocolate and iced coffee to two thirds of US restaurants. In Europe, it is boosting sales by turning portions of its regular restaurants into "McCafes," which sell specialty beverages.
Discount burgers in Germany and desserts in Japan are building on the US popularity of McDonald's $1 double cheeseburger.
Consumers who buy discount items, which generate about 14 percent of McDonald's sales, often buy more-expensive items, said US chief Donald Thompson.
McDonald's reversed falling global sales in May 2003 with entree salads for health-conscious parents who don't want fatty burgers and fries. It has since introduced white-meat chicken strips and grilled-chicken sandwiches as well as a Big Tasty Bacon burger in Germany and a breakfast McSkillet Burrito in the US to tap demand for hearty eaters.
"Our goal is to offer customers choice," Bill Lamar, McDonald's US marketing chief, told reporters on a November 29 conference call.
