McDonald’s August Sales Rebound As Value Makes Comeback

 

McDonald's Corp's  monthly sales rebounded in August after the world's biggest hamburger chain used its low-cost menus to wrestle market share back from resurgent rivals like Burger King Worldwide Inc  and Wendy's Co .

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McDonald's said on Tuesday that global sales at restaurants open at least 13 months had risen 3.7 percent, just missing the 3.9 percent gain that analysts polled by Consensus Metrix had expected.

Results from the Asia/Pacific, Middle East and Africa region easily topped estimates, bolstered by strength in China and Australia. Sales for the United States and Europe - McDonald's two largest markets - were a hair weaker than some analysts expected as economic weakness lingers.

Still, the report showed a big improvement from July, the company's worst month for sales in more than nine years. McDonald's had flat same-restaurant sales around the world that month, on slight declines in all three of its major regions.

Shares of McDonald's were up 0.5 percent at $91.79 in morning trading on the New York Stock Exchange.

Diners around the world remain very cautious about spending money on meals away from home. Since that overall pie is not growing, sales gains at one company often come at the expense of its competitors.

McDonald's for years had been taking market share from rivals like Burger King, Wendy's and Taco Bell  with new selections that include lattes, oatmeal, fruit smoothies and salads. It also gave many restaurants a sleek new look.

But the market share gains recently came to an end when other fast-food chains and pizza delivery companies borrowed from McDonald's play book, primarily by expanding menus.

Analysts said August appeared to be the month when McDonald's began to retaliate. For example, it stepped up advertising for its popular Dollar Menu in the United States.

"McDonald's isn't going to sit idly by," ITG analyst Steve West said. "Nobody can turn the gas on like McDonald's."

The company's same-restaurant sales were up 3 percent in the United States, boosted by the Dollar Menu and breakfast offerings, and rose 3.1 percent in Europe, which got a lift from the London Olympics. Analysts had expected a 3.1 percent rise for the United States and a 3.3 percent increase in Europe.

Europe is McDonald's No. 1 market for sales, just edging out the United States. Positive results in the United Kingdom, France and Russia offset weakness in Germany and certain Southern European markets, the company said.

Same-restaurant sales from McDonald's Asia/Pacific, Middle East and Africa region were up 5.7 percent, topping the analyst's estimate for growth of 4 percent.