McDonald’s (MCD) January sales boosted by dollar; led by Europe

09 02 2008

McDonald’s (MCD) January sales boosted by dollar; led by Europe

Posted by: in Products and Services

Filed under: Products and services, Consumer experience, Competitive strategy, Starbucks (SBUX), McDonald’s (MCD)

It seems to me that my aversion to McDonald’s Corp. (NYSE: MCD)’s burgers and the company’s success are inversely related; the more I dislike the greasy food, the more the fast-food chain succeeds. It was only this day that the world’s largest restaurant company said sales at locations open more than 13 months, commonly know as same-store sales, increased 5.7% in January, spurred by growth in Europe and Asia.

While comparable-store sales in the US grew 1.9% (better than the 1.5% the company had guided), sales in Europe — McDonald’s largest region by revenue — advanced 8.2% and 7.8% in Asia, the Middle East and Africa.

The main culprits to the chain’s growth? In Europe — it was burgers and chicken sandwiches, in China — longer hours, and in the US — it was breakfast. Apparently, the new $2.49 McSkillet breakfast burrito boosted breakfast sales.

But it isn’t just the “yummy” food the chain sells, or its operational improvements that have contributed to growth, it is also the weak dollar. While systemwide sales for its worldwide restaurants increased 13.4% in January, in constant currencies, the increase was 7.1%.

So now what? The stock was hit so far in 2008, trading down over 8.4% to yesterday’s close, after the company reported flat December same-store sales numbers that raised concerns about how a US and perhaps even a global economic weakness could impact the fast-food giant. These numbers alleviated some of these concerns, as at least for now Europe looks more resilient.

McDonald’s, though, seems to never rest and, trying to further boost US sales, it’s going head to head with Starbucks Corp. (NASDAQ: SBUX) by starting last year to offer more specialty coffees. It plans to offer more menu items as well.

You probably won’t catch me eating a Large Mac any time soon, but it’s undeniable the company is managed well and the stock has always been one of my faves. MCD has done well the past 52 weeks, gaining 21%, paying a decent dividend too. The stock is reacting well to the news today, up 2.74%, or $1.49 to $55.95.