McDonald's Beefs Up Sales, Eyes New Products and Services

McDonald's, the world's largest hamburger chain, is making those meals ever happier with a first-quarter report on Friday that showed earnings up 22% on an 11% worldwide sales increase.

Revenues rose to $5.4 billion, from $4.9 billion in the year-ago period.

The Oak Brook-Ill.-based fast-food giant said it will sell nearly 1,600 company-owned restaurants in Latin America and the Caribbean for $700 million in cash. During an analysts call on Friday, company officials said McDonald's plans to keep to a level of no more than 30% company-owned stores in any one region.

McDonald's has recorded 48 straight months of higher sales from its established restaurants, its longest such streak since 1980. First-quarter results were lifted by a particularly strong March in which same-store sales rose 8.2% worldwide and 11.2% in Europe.

In the U.S., the company extended its run of unusually strong results in the quarter thanks to a line of new products including more salads, premium coffee and Snack Wraps.



McDonald's is testing a southern chicken sandwich in Dallas and an Angus beef burger in California. COO Ralph Alvarez told analysts on Friday the company believes the products "have the ability to be scaled" or rolled out nationally.

"We know there is a market out there," Alvarez said. "Our greatest success is when we give our customers what they are already getting in the marketplace at McDonald's price and speed. The type of products we're testing are products that are already in the marketplace and they have consumer appeal.

"What we're looking at is, can we deliver within our operating system. Does the customer believe that Brand McDonald has the credibility in order to sell those?" he said. "We believe we have a strong pipeline for the next three years."

Matthew Paul, CFO of McDonald's, added: "There are two issues here. One is, operationally, can we do it. The other is can it come from McDonald's. We've discovered we've got a lot more freedom of movement because of the way the brand has evolved. Southern-style chicken, Angus beef, premium coffees, iced coffee ... customers told us this makes sense at McDonald's. The perception of what our brand stands for has never been stronger."

In other company news, up to now McDonald's has relied on word of mouth to support its Wi-Fi offering but expects to put real marketing support behind it this year.

Danya Proud, a spokesperson for the chain, couldn't expand on when, where or what kind of marketing support will appear but said McDonald's monopolizes 15% of the 50,000 out-of-home hotspots in the U.S. Wi-Fi is in more than 8,000 of its 13,000 restaurants.

"It's something that we're excited to be able to offer our customers," she said. "It's proven to be very successful in those restaurants in which we currently offer it."

Wi-Fi access is free with every meal for customers with an iPass or an AT&T account and for those using the Nintendo DS system. Others pay $2.95 for two hours.

Last week, Computerworld reported that Nintendo DS gamers account for a quarter of the Wi-Fi traffic in McDonald's restaurants.

Next story loading loading..