McDonald’s Beats Sales Esitmates For October
- Updated: November 10, 2014
McDonald’s Corp. (NYSE:MCD) posted same store sales for October that were higher than Wall Street analysts had estimated. The company reported that its global results for same-store sales for stores open at least 13 months dropped 0.5 percent, significantly less than the 2.2 percent drop predicted by analysts polled by Consensus Metrix.
McDonald’s comparable-store sales decreased by 0.7 percent in its European market and 4.2 percent in the Asia Pacific, Middle East and Africa markets.
The slow sales decline in the restaurant’s United States market appears to have slowed. Same store sales for stores based in the United States decreased by 1 percent, much lower than the 4.1 percent decrease reported for September 2014. The company has more than 14,200 locations within the United States. McDonald’s is currently the world’s largest restaurant chain and is based in Oak Brook, Illinois.
Growth has stalled in the United States due to increased competition from both fast food restaurants and fast-casual chains like Chipotle Mexican Grill. Earlier this year, Taco Bell, owned by Yum! Brands Inc., began selling breakfast items nationwide.
Wendy’s Co. has been introducing specialized sandwiches on unusual buns and Burger King is advertising more discounted foods. Heavy discounting to attract more customers has also weighed heavily on McDonald’s bottom line.
Some believe that the results indicate that the company’s plan to return to growth is gaining traction. The company is reorganizing its operations in the United States to create a more effective organizational structure and is revamping its approach to marketing to target its ads more accurately. After the results were released, McDonald’s shares rose about 1.1 percent in early trading, increasing to $96.17.
To increase its profitability in the future, the company is looking to further streamline its menu and focus on the products that its customers want the most. The company is looking at offering locally relevant fare, such as chorizo burritos in Chicago. McDonald’s also continues to re-release old favorites, like the McRib sandwich, which is coming back to about 75 percent of its stores this month. The company is also planning to upgrade its technology to allow mobile ordering and payments. In California, the company has been experimenting with a build-your-burger concept using touch screen tablets.
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