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McDonald's November sales beat Street view
December 8, 2011 / 1:11 PM / 6 years ago

McDonald's November sales beat Street view

3 Min Read

A cup of coffee is seen on a counter at a McDonald's restaurant in New York April 19, 2011.Brendan McDermid

(Reuters) - McDonald's Corp (MCD.N) reported a bigger-than-expected rise in November sales at established restaurants across the board, led by big gains in Japan, China and a strong showing in its top revenue market of Europe.

Shares rose as much 1.9 percent to hit a new 52-week high of $98.29.

The world's biggest hamburger chain said on Thursday that sales at restaurants open at least 13 months rose 7.4 percent globally. Analysts were looking for an increase of 4.6 percent, according to Thomson Reuters data.

In Europe, where the chain derives 40 percent of revenue, same-restaurant sales rose 6.5 percent, well above the 3.8 percent analysts had forecast, helped by competitive prices, new products and restaurant renovations.

"The consumer is strong enough to accept the premium products," said Lazard Capital Markets analyst Matthew DiFrisco, noting the popularity of McDonald's more expensive coffee products in Europe.

Britain, France, and Germany, which together account for more than half of European revenue, were standout markets, as was Russia, McDonald's said in a statement.

Europe is struggling and investors worry a slowdown there could threaten the global economy, but the chain has been pulling ahead of rivals in recent months.

Analysts have also credited renovations for making its restaurants more appealing for its European clientele and drawing diners away from more expensive restaurants.

Jefferies analyst Andy Barish said in a note he was "impressed with the quality, execution, and local appeal of McDonald's, especially in the current economic environment" in Europe.

U.S. November same-restaurant sales were up 6.5 percent, above analysts' expectations for a rise of 4.2 percent, despite stubbornly high unemployment and other economic problems.

The company leads the fast-food industry and has been increasing its dominance over hamburger chains including Wendy's Co WEN.N and Burger King Corp BKCBK.UL by attracting a broader range of diners than fast food's typical young adult males.

It has done that by adding new menu items like smoothies and Angus burgers, extending operating hours, renovating restaurants and flexing its purchasing and marketing muscle.

"The combination of product and investing in the store seems to be what is driving the top line outperformance," DiFrisco said.

Last month, the chain said it would accelerate its new unit openings and renovations in 2012, with more than 1,300 new restaurants and 2,400 renovations planned.

Sales in its Asia/Pacific, Middle East and Africa unit rose 8.1 percent, beating analysts' calls for a 4.9 percent increase. China and Japan were singled out by the company as outstanding.

In all regions, same-restaurant sales rose more than they did in November 2010.

Shares were up 1.5 percent at $97.90 in midmorning trading, off an earlier high at $98.29.

Reporting by Phil Wahba in New York, additional reporting by Lisa Baertlein in Los Angeles, editing by Maureen Bavdek, Dave Zimmerman and Matthew Lewis

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