McDonald's Corp. highlighted timely promotions and restaurant reimagings on Monday as it reported a 6.5-percent gain in global same-store sales for October.
McDonald’s Europe led the company’s three divisions with a 5.8-percent increase in same-store sales during October, followed by a 5.6-percent increase in the United States and a 5.3-percent increase in the company's Asia/Pacific, Middle East and Africa division.
McDonald’s said strong results in Europe were driven by the performance of restaurants in France, Russia and the United Kingdom. In a research note, analyst Andy Barish of Jefferies and Co. pointed to McDonald’s Europe as particularly well-positioned for sales growth under incoming chief executive Steve Easterbrook, who will replace the Denis Hennequin on Dec. 1.
Easterbrook, who was promoted to global chief brand officer in late August, previously had led McDonald’s U.K. to what Barish called a “remarkable” turnaround.
“The U.K. business represents one of the best turnarounds of any of the McD businesses in recent years,” Barish wrote, “with double-digit same-store sales gains in 2008 and 2009 and high-single-digit [increases] year-to-date in 2010. The business has made this turn with a strong management team, improved public relations, a large number of reimaged restaurants and new products. McDonald’s continues to see very strong market share gains in the U.K., and we have no doubt these learnings can continue to benefit other regions.”
The 5.6-percent rise in McDonald's domestic same-store sales was “largely in line with expectations,” Barish said, while Matthew DiFrisco of Oppenheimer qualified the result to ABC News as a “slight stumble,” missing his firm’s estimate of 7.1 percent and Wall Street’s consensus of about 6 percent.
A report last month from Janney Capital Markets analyst Mark Kalinowski surveyed 34 McDonald’s franchisees, including 32 from the United States, who had projected a gain of 5.7-percent in October same-store sales. Those owner-operators cited the popularity of the Monopoly Game promotion, sales trends of Real Fruit Smoothies and McCafe Frappes, good weather, and comparisons to weak results from last October, when McDonald's domestic same-store sales fell 0.1 percent.
McDonald’s credited the Monopoly promotion with driving the domestic comparable-sales increase and added that improved restaurant operations and the draw of the brand’s core menu helped the bottom line.
The increase in same-store sales in the Asia/Pacific, Middle East and Africa division was driven largely by performance in Japan, China and Australia, the company said.
Oak Brook, Ill.-based McDonald’s operates or franchises more than 32,000 restaurants in more than 100 countries.
Contact Mark Brandau at [email protected]rn.com.