Bloomberg News

McDonald’s Ends U.S. Sales Decline After Touting Free Coffee (4)

May 08, 2014

McDonald’s Corp. (MCD:US), the world’s largest restaurant chain, said same-store sales rose 1.2 percent in April as the U.S. posted its best month since October and results in Asia topped analysts’ estimates.

Analysts estimated a gain of 1.2 percent globally, the average of 16 projections from Consensus Metrix. Sales at McDonald’s U.S. stores open at least 13 months were little changed in the month, the Oak Brook, Illinois-based company said in a statement today. Analysts estimated a 0.1 percent drop.

McDonald’s has recently struggled to attract diners, especially in the U.S., where growing restaurant competition (MCD:US) and shaky consumer confidence are pressuring the industry. The company advertised breakfast foods, free McCafe coffees and new Bacon Clubhouse sandwiches last month, helping fuel U.S. sales.

The April results end five months of declines and may be an early signal of a domestic turnaround. The Big Mac seller last month posted first-quarter profit that fell short of estimates amid harsh winter weather and "challenging industry dynamics’’ in the U.S.

The shares were little changed at $101.95 at the close in New York. The shares (MCD:US) have gained 5.1 percent this year, while the Standard & Poor’s 500 Restaurants Index has lost 1.6 percent.

New Items

Chief Executive Officer Don Thompson has tried a number of tactics to draw Americans into McDonald’s stores, including the free coffees, new Clubhouse burgers and chicken sandwiches. He also has tried selling new breakfast pastries at some stores in San Diego.

Still, competition is fierce, and fast-food rivals are employing new strategies as well. Taco Bell, owned by Yum! Brands Inc. (YUM:US), earlier this year rolled out breakfast fare to its U.S. stores. Burger King Worldwide Inc. (BKW:US) meanwhile has added $1 sandwiches to its menu to attract the value conscious.

Wendy’s Co. today reported first-quarter profit and sales that topped analysts’ estimates as remodeled stores and and new foods helped attract customers. The shares climbed 0.4 percent to $8.36.

McDonalds’s same-store sales rose 0.3 percent in Europe and 2.9 percent in the company’s Asia Pacific, Africa and the Middle East division. Analysts estimated gains of 1.9 percent and 1 percent, respectively.

Comparable-store sales are considered an indicator of a retailer’s performance because they include only older, established locations.

April results were strong in China, compared with a year earlier, when an outbreak of Avian flu hurt sales, McDonald’s said in today’s statement.

In Europe, McDonald’s has recently had success selling premium products such as a Southern Chicken Cajun sandwich and burgers topped with bacon and Emmental cheese in France. April same-store sales gained in France and the U.K. and slid in Germany, McDonald’s said. The chain gets about 40 percent of its revenue from restaurants in Europe.

Of McDonald’s more than 35,400 stores worldwide, about 81 percent are owned by franchisees.

To contact the reporter on this story: Leslie Patton in Chicago at lpatton5@bloomberg.net

To contact the editors responsible for this story: Nick Turner at nturner7@bloomberg.net Kevin Orland, John Lear


We Almost Lost the Nasdaq
LIMITED-TIME OFFER SUBSCRIBE NOW

(enter your email)
(enter up to 5 email addresses, separated by commas)

Max 250 characters

Companies Mentioned

  • MCD
    (McDonald's Corp)
    • $95.19 USD
    • -1.08
    • -1.13%
  • YUM
    (Yum! Brands Inc)
    • $75.21 USD
    • 0.37
    • 0.49%
Market data is delayed at least 15 minutes.
 
blog comments powered by Disqus