McDonald's Same Store Sales Surge in Asia and MENA

McDonald’s Corporation (NYSE:MCD), has reported 3.7% sales growth from its stores older than 12 months, during the month of August, just below the consensus analyst target of 3.9%. The world’s largest chain of restaurants said in a statement that the reported sales were boosted by growth of business in China and Australia, while the company’s Asia Pacific, Middle East and Africa stores reported an average of 5.7%  sales growth during the month. Additionally, the analysts had estimated a growth of 4% for the Oak Brook, Illinois company.

McDonald's Same Store Sales Surge in Asia and MENA

Despite the slowdown in the Chinese economy and intense competition from local restaurants, McDonald’s Corporation (NYSE:MCD) seeks to expand its business in the world’s most populous country by opening additional 250 stores this year. The company receives 22% of its revenue from Asia Pacific, Middle East, and Africa regions.

Additionally, Business Week reports that McDonald’s CEO Don Thompson, has been trying to lure customers with value lunches and dinners in China, in attempt to overcome the challenges the company faces in the country. Atlanta-based analyst at RBC Capital Markets, Larry Miller, is quoted in a statement saying, “they’re working on more value right now everywhere in the world, including China,” in reference to McDonald’s Corporation (NYSE:MCD) activities in China.

Elsewhere, the company’s U.S based stores were up 3%, while European sales were up 3.1%. However, both regions missed analyst targets, which were estimated at 3.1% and 3.3%, respectively. Nonetheless, these results were higher compared to what was reported from Japan, as the far East nation recorded 2.5% decline for the month of August.

The company, faces one hell of a competition in its U.S stores, as competitors have introduced cheap menus, which they are advertising aggressively, especially Yum! Brands, Inc. (NYSE:YUM), which introduced a snack-sized chicken sandwich that goes for only $1.29 a peace.  Meanwhile McDonald’s has a majority of its menus priced at $1-2 at the depth of the current price wars, notes Business Week.

The restaurant chain also faces competition from the Global coffee maker Starbucks Corporation (NASDAQ:SBUX), which recently introduced new mobile payment method in conjunction with Square Inc. in a deal worth $25 million. The coffee maker also has an advantage over its competitor as it can capitalize on the falling prices of coffee.

McDonald’s Corporation (NYSE:MCD) also faces competition from Darden Restaurants, Inc. (NYSE:DRI), and Burger King Worldwide Inc (NYSE:BKW), which have also engaged in the price wars.

At the time of this writing, McDonald’s Corporation (NYSE:MCD) was trading at $91.50 per share, up 0.21%.


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