Frappes, smoothies boost McDonald's

The hamburger chain beats analyst estimates for the third quarter with a 6% jump in comparable sales.

By Kim Peterson Oct 21, 2010 10:34AM
Big Mac © McDonald’sShares of McDonald's (MCD) hit an all-time high Thursday after the company beat analyst estimates for its third quarter.

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.

2Comments
Oct 21, 2010 5:19PM
avatar
This is no joke when you elect a president who has never had a real job you will run into this problem. Obama has never ran or owned a business if you had a business man running this nation they would cut the 35% tax to nothing for the next 5 years if they invested in hard asset and job's. There is one Trillion dollars of outside investment that could come in that could be tax then off of payroll. Next time vote brain power!
Oct 21, 2010 1:37PM
avatar

If  only they would do local deliveries...

 

sigh

 

PS I would also like if they went back SUGAR instead of HFCS in their addictive  COCA COLA.

Smile

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