AP News

McDonald's 3Q should indicate economic pressures


NEW YORK (AP) — McDonald's Corp. reports its third-quarter results Friday, which should give a glimpse of how the world's biggest hamburger chain is coping with intensifying competition and the challenging global economy.

WHAT TO WATCH FOR: After outperforming its rivals for years, some analyst think McDonald's may be entering a period of slower growth. The company, based in Oak Brook, Ill., said in the previous quarter that sales at restaurants open at least a year rose 3.7 percent, marking the most modest increase since the end of 2009. The figure is a key metric because it strips out the impact of newly opened and closed locations.

WHY IT MATTERS: With about 33,000 restaurants around the world, McDonald's is often seen as a bellwether for the broader industry.

The company has exceeded expectations in recent years in part by emphasizing value and continually evolving its menu to keep up with changing tastes. But McDonald's is struggling to increase sales in regions of the world that have been particularly hard-hit. In Europe, which accounts for 40 percent of the business, the company said in the previous quarter that customer traffic was down in several regions. The company is also seeing weakness in Japan, where people are still reeling from the impact of last year's earthquake and tsunami and eating at home more often.

The company is also facing more competition, with fast-casual chains such as Panera Bread Co. and Chipotle Mexican Grill Inc. offering better food for a little more money. Even among traditional fast-food chains, old rivals such as Wendy's and Burger King have been revamping their menus and stepping up marketing.

LAST YEAR'S QUARTER: The company earned $1.51 billion, or $1.45 per share. Revenue was $7.166 billion.

WHAT'S EXPECTED: Analysts on average expect a profit of $1.48 per share on revenue of $7.17 billion.


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