McDonald’s August sales rise 1.9% driven by demand in Europe

September 10, 2013 04:56 AM

McDonald’s Corp., the world’s largest restaurant chain, said sales at stores open at least 13 months advanced 1.9% last month, topping analysts’ estimates, helped by demand in Europe.

Analysts projected a 0.3% increase, the average of 16 estimates from Consensus Metrix. Same-store sales rose 3.3% in Europe, the biggest gain since June 2012, the Oak Brook, Illinois-based company said in a statement today. Analysts estimated a 0.1% drop.

McDonald’s, which gets about 40% of revenue from European nations, said it attracted customers in France and Russia and benefited from the introduction of blended-ice beverages in the U.K. Economic confidence in the euro area rose to a two-year high in August as the currency bloc’s recovery gathered pace after it exited a record-long recession.

“We’re hearing from other sectors that Europe is getting better -- these results seem to indicate that things are a little bit better” for McDonald’s, Peter Saleh, an analyst at Telsey Advisory Group in New York, said in an interview.

Same-store sales were positive in August after falling in July in France, the fast-food chain’s largest European market after Germany. McDonald’s, which has more than 1,200 locations in France, has been advertising combo meals including a Big Tasty burger with Emmental cheese, to draw French diners.

The shares rose 0.9% to $97.31 at 8:53 a.m in New York. McDonald’s had advanced 9.3% this year through yesterday, while the Standard & Poor’s 500 Restaurants Index gained 16%.

Chicken Wings

Same-store sales increased 0.2% in the U.S., trailing the 0.8% gain projected by analysts. The fast- food chain is facing a tough consumer environment in the U.S., where it’s attempting to draw Americans with new items including chicken wings, egg-white breakfast sandwiches and different flavored Quarter Pounder burgers.

McDonald’s is testing a new Dollar Menu that includes items selling for as much as $5 in five markets across the U.S. The chain is facing pressure from domestic store owners who have met to discuss higher costs, including rents, and the increasingly difficult economics of the Dollar Menu.

Comparable sales dropped 0.5% in the company’s Asia- Pacific, Middle East and Africa region. Analysts forecast a decline of 1%, according to Consensus Metrix, a researcher owned by Kaul Advisory Group in Wayne, New Jersey.

Comparable-store sales are considered an indicator of growth because they include only older, established locations.

There are more than 34,700 McDonald’s restaurants worldwide, of which about 81% are franchise.

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