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McD posts strong comps in July

OAK BROOK Ill. McDonald’s breakfast menu, chicken offerings, $1 beverage promotions and the marketing of its classic Big Mac helped drive same-store sales at domestic restaurants up 6.7 percent in July, the company said Friday.

The jump was larger than expected, according to some analysts, and included about 4 percent of year-to-year menu price increases.

David Palmer, securities analyst at UBS Equity Research, also noted that McDonald’s fastest-growing products, mainly the chain’s breakfast and beverage items, hold lower food costs and may help profit flow through.

“Strong growth in high-margin products augers well for U.S. profit growth in the third quarter in spite of rising hamburger commodity prices,” he said.

Escalated food costs, especially for McDonald’s Dollar Menu star, the Double Cheeseburger, have forced the No. 1 burger brand to explore price hikes and alternate recipes for the sandwich. Franchisees have complained that profit from the Dollar Menu item has nearly disappeared as costs have increased.

In July, McDonald’s global same-store sales rose 8.0 percent, which reflected gains of 7.6 percent in Europe and 7.2 percent in the Asia-Pacific, Middle East and Africa region.

August promotions for McDonald’s, a chain of more than 35,000 restaurants worldwide, include its Southern Style Chicken sandwich and tie-ins to the Summer Olympics, which kicked off Friday.

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