McDonald's

McDonald's names new China chief executive
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More Business & Investing News... BEIJING, March 3 (Reuters) - McDonald's Corp (MCD.N) on Monday named Kenneth Chan as its new chief executive officer in China, replacing Jeffrey Schwartz, the company said in a statement.

Chan, a Singaporean, has been with McDonald's for 12 years, most recently acting as regional manager in Malaysia, Taiwan and Korea, and managing director of its restaurants in Singapore.

Schwartz, a 40-year McDonald's veteran, will retire from the company, the statement said. (Reporting by Michael Wei; Editing by Ken Wills)

McDonald's Sales Are Up

Great article on McDonald's Sales from Reuters.

McDonald's October sales beat Street; dollar weighs
Reuters
Monday, November 10, 2008; 11:39 AM
http://www.washingtonpost.com/wp-dyn/content/article/2008/11/10/AR2008111000693_pf.html

LOS ANGELES (Reuters) - McDonald's Corp on Monday said global sales at its fast-food restaurants open at least 13 months rose 8.2 percent in October, topping analysts' targets and sending its shares up more than 2 percent.

Same-store sales, a key gauge of retail health, rose 5.3 percent in the United States, 9.8 percent in Europe and 11.5 percent in the Asia/Pacific, Middle East and Africa (APMEA) division.

RBC Capital Markets analyst Larry Miller said the October results "were above expectations in every division" and that the report's one "negative," which was not unexpected, was that the impact of foreign exchange has started to turn against the company in its overseas markets.

McDonald's last week said it expects revenue and operating income to be hurt by foreign currency translation in the current quarter because the U.S. dollar has gained strength.

RBC's Miller had been looking for overall global sales at established restaurants to be up 5.5 percent, which he said was above the consensus call for growth of 5.2 percent.

McDonald's, which has more than 31,000 restaurants in more than 100 countries, said that systemwide sales for its worldwide restaurants increased 5.4 percent for the month, or 9.9 percent in constant currencies.

The Oak Brook, Illinois-based company said breakfast, Southern Style Chicken sandwiches and its Monopoly game helped drive domestic traffic.

Strong results in the United Kingdom, France and Russia as well as promotions and value items boosted results in Europe, while localized menu items, value items and extended hours helped in APMEA, the restaurant chain said.

McDonald's has been one of the best performing fast-food chains, beating peers like Wendy's/Arby's Group Inc and Jack in the Box Inc at driving customer traffic and keeping a lid on commodity costs.

Still, rising prices for key ingredients like beef and cheese have prompted the company to consider changes to its popular Dollar Menu as the higher cost of making its flagship Double Cheeseburger pinches franchisees -- whose payments to McDonald's represent about two-thirds of company profits.

Shares in McDonald's were up $1.15, or 2.1 percent, at

$56.62.

Elsewhere, shares in rival Burger King Holdings were down 0.6 percent. Wendy's/Arby's shares tumbled more than 5 percent, Jack in the Box shares were off about 1.5 percent and stock in CKE Restaurants Inc , parent of the Carl's Jr burger chain, fell 3.6 percent.

(Reporting by Lisa Baertlein in Los Angeles and Nicole Maestri in New York; Editing by Steve Orlofsky and Brian Moss)
© 2008 Reuters

McDonald's Same Store Sales Increase

McDonald's posted an increase in same store sales for August. Check out the Wall Street Journal Article for more details below. For more information on franchising your business or franchise consultants go to www.francorp.com.

McDonald's Olympic Offerings
Help Boost Same-Store Sales
By SHARA TIBKEN
September 9, 2008 10:26 a.m.
Wall Street Journal
http://online.wsj.com/article/SB122096447139714607.html?mod=djkeyword

McDonald's Corp. reported an 8.5% increase in August global same-store sales, with a 4.5% gain domestically, boosted by beverages, the popular breakfast menu and the Olympic-themed Southern Style Chicken Sandwich.

European same-store sales jumped 12% due to menu variety and strong performance in the U.K., France and Germany. The company's Asia-Pacific, Middle East and Africa region saw 10% growth, driven by extended hours and Olympic-related marketing.

Systemwide sales increased 14% world-wide, or 10% in constant currency.

In March, McDonald's reported same-store sales in the U.S. fell for the first time in five years, but the company has posted solid increases since then. The overall restaurant sector in the U.S. has been hurt by high gasoline and food prices, as well as by the slumping housing market and credit crisis. August sales slowed across the fast-food industry, but UBS predicted on Monday that McDonald's could outperform its peers on the back of its Olympics advertising campaign and a successful "Star Wars" Happy Meal.

Soaring commodity costs have forced some McDonald's franchises to re-evaluate pricing, including for the popular Dollar Menu offerings. McDonald's has been testing modifications to its popular $1 double cheeseburger, and higher prices for the sandwich, as it prepares to change its Dollar Menu by next year. Some restaurants are selling it with one slice of cheese instead of two and billing it as a "double hamburger with cheese." Others are offering a double hamburger without cheese.

But McDonald's has been benefiting from new menu items, expanded hours and the tendency of cash-strapped consumers to "trade down" from more pricey eating-out options in the U.S. Overseas, it is benefiting from expansion and internal growth in markets like Australia, China and Japan while getting the currency benefits of the sagging U.S. dollar.

Write to Shara Tibken at shara.tibken@dowjones.com

McDonald's Continues to Grow Despite Market

Posted: July 17, 2008, 9:10 AM by David Pett
Market Call
The Street could be underestimating McDonalds Corp.'s earnings growth potential as the storied fast food retailer makes the turn into the second half of the year.
That's the opinion of UBS analyst David Palmer, who reiterated his "buy" rating on the stock and left his US$69 price target unchanged.
"While dividend increases will continue to support valuation, we believe return of investment capital gains and earnings per share upside should remain the key stock drivers in the second half of 2008 and beyond," Mr. Palmer said in a note to clients.
In particular, the analyst said certain EPS drivers are being underestimated by the consensus, including supply chain changes the company has made and greater general & administrative efficiency. He said McDonalds can also expect sales upside from new European kitchens and the launch of new beverages as the company rolls out iced coffees and teas across the U.S.
Mr. Palmer raised his second quarter EPS estimate from US85¢ to US87¢ on expectations of better margins and a slightly higher currency in the quarter. He forecasts June's same store sales growth of 2% in the U.S., 4% in Europe and 4% in Asia Pacific, the Middle East and Africa.
David Pett -->

McDonald's and the McCafe

Conventional wisdom says McDonald’s should continue to have great success as the economy slows and consumers trade down restaurants just as they’ve been trading down to Wal-Mart for their shopping needs. Sounds great, except that the company's insiders beg to differ: Over the last six months, nearly 760,000 shares worth some $43 million have been sold.

A significant amount by any measure, this works out to roughly a 20% liquidation of the insiders according to Thomson Financial. CEO James Skinner sold 35% of his stake. Gloria Santona, the general counsel, parted with more than half of her shares. Jose Armario, responsible for Canada and Latin America, traded away 80% of his holdings.

My guess is that they’re less than confident about the big McCafé push. Better drip coffee is one thing, and McDonald’s definitely has good drip coffee. But going head-to-head with Starbucks is another. Don’t kid yourself: McDonald’s will never be Starbucks -- and by the look of things it probably doesn’t want to be Starbucks anyway. There just isn’t any synergy between burgers, fries, and cappuccinos.

Consider demographics and brand personality. Starbucks is urban, born in Seattle, and populated by graduate students looking for single-origin coffees from Africa. McDonald’s is Mainstreet U.S.A., packed full of blue-collar men, moms and kids, and broke teens ordering off the dollar menu. If you can’t picture a truck driver from Wyoming ordering a double-pump vanilla non-fat latté, then McCafé is doomed -- especially with all the competition entering the field.

That isn’t to say all hope is lost. Going upscale with better chicken items, salads and fruits, and remodeled restaurants has been successful. Better quality hamburgers featuring Angus beef are being tested in select markets. Efforts should continue to focus on improving and expanding the food offerings, taking into account the lessons of the Arch Deluxe failure.

McDonald’s head chef Dan Coudreaut, labeled the “Most Powerful Chef in America,” has already demonstrated success with the Asian Salad and McSkillet Burritos. Given the continued emphasis on fitness and health in society, there is a big opportunity for McDonald’s to clean up its image. Offering fresh vegetables in Happy Meals would be a good start. Bringing back the deli sandwiches would be another.

Until then, rising food prices will pinch margins hard, sales will drag, and free cashflow will be tied up in the coffee fiasco. Maybe shares won’t tumble, but it’s hard to see them going much higher from here.