Friday, November 9, 2007

McDonald's: Rollin'

Jeez, McDonald's (MCD) just cannot be slowed down.

McDonald’s Chief Executive Officer Jim Skinner said, "We are leveraging our menu variety and value with convenient restaurant locations and innovative marketing to deliver a restaurant experience that resonates with customers. The combined strength of these strategic initiatives continues to drive our business forward." How good was it?

Thursday that same-store sales grew 6.9% in October, with gains across all of its regions. Systemwide sales for McDonald's restaurants worldwide increased 14.2% for the month (8.2% in constant currencies).

In the U.S., same-store sales for the month increased 5.4%. Europe, the company's second-largest market, reported a 6.4% rise for the month, led by France, the U.K. and Russia. Asia/Pacific, the Middle East and Africa climbed 9.4%, led by Australia, Japan and China.

Why? In a word, value. The chains value menu, which appeals to consumers pressed by higher costs for gasoline and other items is seeing sales surge. This is the reason I have been saying since January that Starbucks (SBUX) is out of luck if they think they are going to offset dairy and coffee cost increases with yet another price increase on customers. Starbucks reports on 11/15. It will be interesting to compare their commentary.

If people feel their wallet pinched, the first thing that will go is the $5 latte'.

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