McDonalds Global Sales Rise in May

McDonald’s Corp. cited new products and value offerings for a 4.8-percent increase in global same-store sales for the month of May.

In the United States, where same-store sales rose 3.4 percent in May, McDonald’s pointed to the success of a $1 beverage program in some markets and the Frappe, the newest addition to the McCafe line now in most U.S. stores. The operator or franchisor of more than 14,000 restaurants in the United States also cited its ongoing efforts to reimage several hundred units this year.

In addition, McDonald’s touted a promotion tied to “Shrek Forever After” that was selling Chicken McNuggets and Happy Meals, though the effect of a recall of “Shrek”-theme promotional glassware won’t be known for some weeks.

“May marks another month of sustained sales growth, demonstrating the ongoing appeal of McDonald’s unique combination of convenience, value and variety,” said chief executive Jim Skinner. “Our focus on enhancing the McDonald’s experience through affordable food choices, modernized restaurants and relevant marketing is giving customers even more reasons to visit McDonald’s.”

Same-store sales rose 5.7 percent in McDonald’s European division and 3.8 percent in the Asia/Pacific, Middle East and Africa, or APMEA, division.

France, Germany, Russia and the United Kingdom continue to drive strong sales in Europe, where McDonald’s has focused on daypart expansion with four-tier menus and new products like Germany’s McWrap, the company said. McDonald’s added that Australia and China helped boost sales in the APMEA region.

The 4.8-percent rise in global same-store sales beat financial analysts’ expectations of an increase between 3.5 percent and 4 percent, though the U.S. result, while still among its strongest of 2010, fell below Wall Street’s prediction of 4 percent and slightly lagged McDonald’s 3.8-percent increase in April same-store sales.

Skinner and McDonald’s president and chief operating officer, Don Thompson, recently told analysts gathered at an investor conference that the chain would continue to pursue growing market share with new products like the forthcoming Real Fruit Smoothies, the Angus Snack Wrap and oatmeal, which is planned for a 2011 rollout. McDonald’s also will continue to promote the McCafe coffee line, which has increased coffee sales 38 percent through April of this year, the executives said.

Restaurant industry analysts have noted that McDonald’s has fared better in the economic downturn of the past few years — even as high unemployment in the United States has wreaked havoc on the core quick-service customer – because of its menu diversity that appeals across regions, ages and income levels.

According to a report from securities analyst Jeff Farmer at Jeffries & Co. in Boston, McDonald’s same-store sales have the lowest correlation to the national unemployment rate, which inched downward slightly to 9.7 percent in May, according to the Bureau of Labor Statistics. Meanwhile, competitors like Burger King, Sonic and Jack in the Box have shown a much higher negative correlation, meaning those brands’ same-store sales have fallen more drastically as the unemployment rate has risen during the past 10 years, the report found.

McDonald’s also said Tuesday that it expects foreign-currency translation, especially for the euro, which accounts for 25 percent of its global sales, to have a negative impact on net earnings per share for the year. The company does not expect such an impact, however, for second-quarter earnings, which McDonald’s tentatively plans to report July 23.

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