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McDonald's new drinks drive Aug. sales jump

Company cites popularity of smoothies, frappes in U.S.

McDonald’s Corp. said its new blended beverages continued to drive strong sales in its U.S. business, contributing to a 4.9-percent increase in global same-store sales in August.

Same-store sales for the month rose 4.6 percent in the United States, 2.2 percent in Europe and 7.8 percent in the company’s Asia/Pacific, Middle East, Africa, or APMEA, division, McDonald's said Thursday.

Chief executive Jim Skinner said a “unique balance of food and beverage choices” — such as the recently introduced Angus Snack Wraps and Real Fruit Smoothies and Frappes in the United States, and barbecue limited-time offers in the United Kingdom — were “driving performance in every area of the world.”

“We’re offering new menu items and classic favorites, including premium and value selections, all for our customers to enjoy in our convenient, contemporary restaurants,” Skinner said, referring to a companywide push to remodel hundreds of restaurants this year. “We intend to continue our momentum by further enhancing the McDonald’s experience and giving customers even more reasons to visit.”

The company said the extensions to the McCafe beverage line drove domestic sales in August, complemented by everyday value and core menu items. Some investors see McDonald’s positioning as solid enough to withstand several competitors’ recent moves to steal its U.S. market share, such as Burger King’s extension of its breakfast menu.

Analyst Jason West of Deutsche Bank wrote in a research note this week that Burger King’s introduction of nine new breakfast items would have “immaterial impact” on McDonald’s dominance of the morning daypart.

West estimated an incremental breakfast sales gain for Burger King of about $120 million, which represents 1.5 percent of McDonald’s estimated $8 billion in annual breakfast sales.

“While McDonald’s could see some slight impact to breakfast traffic during the initial marketing push by Burger King,” he wrote, “we do not expect this to be material to the overall business.”

In McDonald’s European division, strong performance by restaurants in the United Kingdom and Russia offset weaker numbers in France in August, the company said.

The company credited locally relevant menus, value options in multiple dayparts and convenience for the gain in same-store sales in the APMEA region, led by strong performance in Japan, China and Australia.

Oak Brook, Ill.-based McDonald’s operates or franchises more than 32,000 quick-service restaurants in more than 100 countries.

Contact Mark Brandau at [email protected].

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