McDonald’s (NYSE:MCD) Profit Increases as Dollar Menu Leads U.S. Sales

Northern, WI 1/24/2013 (avauncer) - McDonald’s Corp. (NYSE:MCD), the world’s biggest restaurant chain in terms of sales, said 4^th quarter profit increased 1.4% due to its dollar menu and McRib sandwich that boosted U.S. sales. Net income went up to $1.4 billion/ $1.38 share, from $1.38 billion/ $1.33, for the previous year, the company said in a statement. Analysts estimated $1.33, the mean of 28 estimates listed by Bloomberg.

The company’s CEO Don Thompson hiked promotion of the chain’s dollar menu items, like McDouble burgers as well as McChicken sandwiches, to attract Americans since the  consumer confidence declines. Sales at the U.S. stores start at least 13 months increased to 0.3% during the quarter. Analysts estimated a 0.5% decline, the mean of 22 estimates collected by Consensus Metrix.

In an interview, Peter Saleh, an analyst at Telsey Advisory Group, said, “There’s a significant push on value with a lot of media behind it on TV. While that helped McDonald’s put up “respectable numbers” in the U.S. for the quarter, January may be weaker because of bad weather and the Social Security tax increase”.

The company’s shares increased 0.6% to close at $93.48 on NYSE. The stock had declined 12% last year as against a decline of 2.6% for the Standard & Poor’s 500 Restaurants Index. As per Consensus Metrix, a researcher from  Wayne, quarterly comparable store sales went up by 0.1% worldwide as against an approximate fall of 0.3%.

The company’s CEO Thompson said, “For the near-term we expect top and bottom-line growth to remain pressured, with January’s global comparable sales expected to be negative.” McDonald’s (NYSE:MCD) is facing stiff competition from Burger King Worldwide Inc. (NYSE:BKW), which has lately launched new products as well as Yum! Brands Inc. (NYSE:YUM)’s Taco Bell chain which has been promoting value products like 99 cent beefy nacho grillers.

McDonald’s (NYSE:MCD) plans to introduce more new menu items in 2013 as compared to 2012, Thompson has said. The fast food chain with over 34,000 locations globally has commenced testing chicken wings in Chicago in order to attract clients and increase income. It will also launch Fish McBites in US shortly, followed by new beef sandwiches, breakfast items, chicken entrees and drinks.

McDonald’s (NYSE:MCD) will spend $3.2 billion in 2013 to start as high as 1,600 new restaurants and modify locations globally. The chain has been altering restaurants in the U.K. and other places in Europe, which accounts for around 40% of revenue.

McDonald’s (NYSE:MCD) shares closed at around $94

Burger King Worldwide Inc.(NYSE:BKW) shares were down by 0.06% to close at $18.12

Yum! Brands Inc. (NYSE:YUM) shares were up by 1.24% to close at $66.10