No McDonald's $1 breakfast menu decision yet: exec

By Brad Dorfman and Lisa Baertlein

CHICAGO/PALM SPRINGS, Calif (Reuters) - McDonald's Corp (MCD.N) is considering rolling out a breakfast "Dollar Menu" nationally, but a final decision has not been made, U.S. president Don Thompson told investors on Thursday.

McDonald's restaurants in Chicago and other markets have been offering breakfast items for $1 each as rising U.S. unemployment means fewer people are stopping in for a morning meal on their way to work.

A plan to offer the low-price breakfast menus nationwide during the first six months of 2010 has cleared early hurdles, according to news reports.

Chief Executive Jim Skinner recently said that high unemployment has had "some impact" on the breakfast business at McDonald's, which accounts for about a quarter of U.S. sales.

McDonald's helped pioneer the use of "value menus" at fast-food chains and has used its own Dollar Menu to draw cash-strapped diners amid the worst recession since the Great Depression.

Falling prices for meat, cheese and other key foods have made it easier for restaurant chains to protect profits while attempting to lure customers with discounts. But discounting has become rampant, threatening industry margins.

GROWTH CHALLENGE

McDonald's is one of the restaurant industry's best performing names and has been gaining share during the economic downturn.

While it is faring better than many rivals, McDonald's is not immune to economic forces and a 10.2 jobless rate.

Earlier this week it said sales at U.S. stores open at least 13 months dipped 0.1 percent in October, the first decline since March 2008.

The company plans to spend $2.4 billion on capital improvements in 2010 as it continues to revamp restaurants and expand in emerging markets.

Half of the spending will be on new restaurants and the other half will be spent on remodeling existing restaurants, Chief Financial Officer Pete Bensen said.

McDonald's, which has more than 32,000 restaurant, plans to open 1,000 restaurants next year, Bensen said. The company plans to open more restaurants with drive-throughs, which cost more, but have higher returns,

The company plans to open 150-175 restaurants in China and 40 in Russia, both fast-growing emerging markets.

The company also said it continues to exceed its long-term targets of 3 percent to 5 percent annual sales growth and 6 percent to 7 percent operating income growth, excluding currency fluctuations.