BloggingStocks

McDonald's same-store sales reflect world's love for cheap food

Posted Nov 11th 2008 6:32AM by Sarah GilbertSarah Gilbert RSS Feed
Filed under: Starbucks (SBUX), McDonald's (MCD)

More

The world has not been swayed by the coy laugh of organic vegetables, the winsome eyes of local produce, the sparkling personality of grass-fed beef. When money's tight, the world goes to McDonald's for a dollar burger, and maybe a splurge on Southern-style chicken, an opportunity to win big -- or small, that next package of French fries has to come from somewhere -- with the chain's traditional 'Monopoly' game. Same-store sales were up 8.2% worldwide, with a respectable 5.3% increase in U.S. outlets.

McDonald's Corporation (NYSE: MCD) is still struggling to gain Wall Street approval for many of its recent moves, such as expanding hours and diving head-first into competition with Starbucks, rolling out espresso bars and fancy blended coffee drinks into its U.S. stores. Given some rough numbers from Starbucks (NASDAQ: SBUX) out yesterday, it seems reasonable to wonder whether customers are avoiding the pricey pastries and coffee drinks at Starbucks and heading for the Dollar Menu at McDonald's.


All this news comes, however, with an undercurrent of concern for the future of that vaunted Dollar Menu. Costs for the Double Cheeseburger are pressuring franchisees' profits to the breaking point, and McDonald's is considering raising its price to $1.19 and adding a new sorta-double cheeseburger called "McDouble," eliminating one slice of cheese from the product (leaving two hamburger patties and one slice of cheese, along with the typical bit-o-condiments).

Will increased costs and margin pressures mean the Dollar Menu becomes the Buck-fifty Menu? Will customers stick around if the concept is trashed altogether? Will consumers feel nickled-and-dimed if cheese slices and pickles start disappearing from their favorite foods? As long as McDonald's is offering the cheaper option of several alternatives, and customers' wallets are squeezed, the Big Mac will still be a popular choice. But that's a rather pessimistic future; in my opinion price will not be the only long-term concern for consumers. Soon health and sustainability may become more of a focus for consumers, and McDonald's will have a tough decision about how to respond.

Tags: fast food, FastFood, inthenews, junk food, JunkFood, mcd, mcdonalds, sales, same store sales, SameStoreSales

Reader Comments (Page 1 of 4)

| 1 | 2 | 3 | 4 | Most Recent | Next 20 Comments

All contents copyright © 2003-2009, Weblogs, Inc. All rights reserved

BloggingStocks is a member of the Weblogs, Inc. Network. Privacy Policy, Terms of Service, Notify AOL