Frappes, smoothies boost McDonald's
The hamburger chain beats analyst estimates for the third quarter with a 6% jump in comparable sales.
The company said interesting menu items like frappes and smoothies helped drive traffic, as well as the continued appeal of the dollar menu in tough economic times. Comparable sales were up 6% worldwide.
McDonald's reported a $1.39 billion profit, or $1.29 a share, for the quarter. That's up from $1.26 billion, or $1.15 a share, in the year-ago period. Analysts had expected $1.25 a share.
Revenue was up 4.3% to $6.3 billion. The Street was looking for $6.23 billion.
Chief executive Jim Skinner predicted continued momentum in the current quarter and said global comparable sales for October are expected to rise 5% to 6%. That's a key figure to note because it measures growth at existing locations without the impact of new ones.
"McDonald's continues to gain market share," one restaurant analyst told Bloomberg. "There's not going to be another hamburger chain that posts anywhere near that."
McDonald's does need to worry about rising commodity costs, and that could weigh on investors' minds in the future. Operating margins could be less pronounced in 2011 than they have been this year, writes analyst R.J. Hottovy of Morningstar. "However, we believe the firm's considerable bargaining power over suppliers and diligent focus on labor and other operating expenses position McDonald's to better weather these cost headwinds than its rivals," Hottovy added.
If only they would do local deliveries...
PS I would also like if they went back SUGAR instead of HFCS in their addictive COCA COLA.
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