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McDonald's turnaround is sustainable, says consultant

Friday, April 22, 2016 - 03:51

McDonald's is gaining new customers with its All-Day Breakfast menu, says Dave Henkes of Technomic. Quarterly profit at the world's largest restaurant chain rose 35 percent. Fred Katayama reports.

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McDonald's beefing up quarterly profit 35%. Beating estimates joining us for analysis from our Chicago bureau days and yes. He's senior principal and consulting company economic. Well I think what's fueling mcdonalds now performance. I will good afternoon thanks for avenue outside what a difference a year makes right last year we're talking about the McDonald's and other struggling in changing restaurant environment. And today we're talking about 5% plus same store sales. Record profit growth and so we're look anatomy and new McDonald's. That has introduced all day breakfast but very popular with consumers one of our initial concerns is that it was gonna cannibalize some of their existing sales it doesn't seem to have. And that's the most public reason but there's other things from menu optimization. They've done some things operationally to speed up service and trim back their menu. And so there restaurant chain right now that's really executing. On all cylinders. I'm Dave at some point isn't all day breakfast going to Wear off was wondering does McDonald's cabinet catalyst and keep spurring sales at a time when. People are becoming more health conscious. Well listen that's the that's the concern right is is how long can they keep it going and I think what we've seen to date. Is that rather than bringing check average low by converting people from big Macs are quarter pounders down to a breakfast damage. Is bringing in new consumers and anecdotally I know a lot of people that. Are using McDonald's for the first time in several years simply because of all day breakfast themselves. The fact that they've been able to sustain this performance over three quarters and in really every quarter show very positive numbers here in the US. I think indicates that it's sustainable certainly over the next couple of years. The savior you talk about new customers. Is McDonald's regaining any market share lost to shake shack in the Wendy's well. Well. Listen I mean you know McDonald's is the 800 pound gorilla on the blocker at the burger categories almost eighty billion dollars in sales. McDonald's has over 40% of that and so when you look at their growth last year they grew about 1%. Which is the size of a chain my corner bakery so to do that every year is very hard. The same time chains like Burger King they were up over 4% Wendy's did pretty well. But certainly these better burger players burger if I move we have burger shake shack. All of these guys continue to set the bar very high and so McDonald's last year despite their performance. Actually lost a little bit the total burger category grew a little over 3%. And so their share actually declined a little bit but again there's such a big part of the market. That I'm sure with continued performance like this they'll they'll start to regain some of their share. Do you see any county odds right now based on the quarterly report or Steve Easter book smooth he's taken over. Well I think you know caveats are as we talked about you know it can they keep the the momentum on all day breakfast I think the answer seems to be yes operationally their trying some new things are plane with some different versions of the big Mac. 101 of their franchisees as testing. Unlimited all you can eat Fries. And so I think the challenges to keep the paddle on the gas or keep the gas down in terms of the innovation that they're doing. I think over the past couple years they've been challenged in terms of the speed of service and so. Optimizing the menu and working to to make operational changes obviously improves the customer experience. So you know certainly. In a very competitive restaurant environment there's a lot of watch out but what they've been doing seems to be working and if they keep. You know keep going in that same directory though they'll be fine. Okay thanks update for sharing your views. Great thanks for having our thanks to Dave Pincus of economic I'm Fred Katayama this is growing.

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McDonald's turnaround is sustainable, says consultant

Friday, April 22, 2016 - 03:51