Bright 3Q for McDonald's

October 22/Oak Brook, Ill./The Hamilton Spectator -- McDonald's frappes, smoothies and dollar menu drew in the highest customer count in more than two decades to push the world's largest burger chain's net income up 10% in the third quarter.

Results beat estimates, as the company's third quarter continued a long streak of outperforming competitors such as Wendy's and Burger King with rollouts of new products, including Angus snack wraps, smoothies and frappes, which McDonald's introduced this summer.

The new menu items have kept diners returning and spending as the economic downturn dampens their appetite for meals out. Investors like what they see, sending shares up some 26% so far this year.

CEO Jim Skinner said those smoothies and frappes helped the company achieve its highest customer count in more than 20 years, though he did not provide specifics. The chain plans to come out with new products next year, including oatmeal available all day.

The company is also using limited-time products to drive sales. It plans to roll out its McRib sandwich on a national basis next month, something it said it has not done in years.

The new drinks, which have high profit margins, have been keeping people's interest because they are typically low cost, just a few dollars, and customers can easily grab them on the go.

"It's just something new and often that consumers demand, and we've seen beverages become a larger part of restaurant menus in the last several years," said Morningstar senior analyst R.J. Hottovy. "McDonald's has been at the forefront of that movement."

Revenue at stores around the world open at least 13 months rose 6%, led by 8.1% growth in Africa, Asia/Pacific and the Middle East. In the U.S., the figure rose 5.3%, while in Europe, it rose 4.1%.

The company said results in Europe were helped by expanded hours and updated restaurants. In the U.S., people continued to respond well to new drink options and the value menu.

Expanded hours are also part of the domestic strategy to expand sales. Some 40% of the company's restaurants are now open 24 hours, and more than 80% are open by 5 a.m.  

From the October 25, 2010, Prepared Foods' Daily News
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