McDonald's posts strong U.S. sales

CHICAGO -- McDonald's Corp. extended the recovery in its once-slumping restaurants to an eighth straight month Monday, reporting a double-digit gain in U.S. same-store sales and a modest improvement in Europe, its second-biggest market.\nSystemwide sales from the more than 30,000 McDonald's-brand restaurants worldwide jumped 14.9 percent from a year earlier as the world's largest fast-food chain continued to benefit from new products, new marketing, a strengthened economy and the dollar's weakness overseas.\nSame-store sales from McDonald's restaurants open more than a year, a key barometer of performance, rose 6.4 percent from a year earlier. Most notably, comparable sales climbed 10.2 percent at U.S. restaurants -- the eighth consecutive increase overall and third month in a row of double-digit growth -- and 1.9 percent in Europe, where sales have been sluggish.\nMcDonald's U.S. sales have been invigorated since last spring by a pair of successful new products -- entree-sized salads and McGriddles breakfast sandwiches -- and extended hours.\nFirst-year company head Jim Cantalupo also cited contributions from the menu of $1 items, the new "I'm lovin' it" marketing campaign and "an improved customer experience."\n"While we still have work to do, our momentum continues as we maintain focus and discipline on what counts most -- our customers and restaurants," the chairman and chief executive officer said.\nAnalysts see the gains as likely to continue into 2004, at least until the monthly results start bumping up against tough comparisons with last spring's upswing.\n"They're starting to fire on more cylinders than they were last year," Morningstar analyst Carl Sibilski said. "Their business is more robust, and they're comparing it to a very weak period last year."\nCantalupo said the company will soon decide the future of its partner brands, which include Chipotle Mexican Grill, Boston Market and Donato's Pizza. McDonald's said earlier this fall it would take unspecified fourth-quarter charges amid speculation it might spin off the brands into a separate company, retaining a large equity stake.\nIndustry experts say the partner brands, providing just 2 percent of revenue, have been a distraction while the golden arches still faces challenges with service, food quality and new products in a crowded fast-food market.\n"The biggest bang for the buck is to get the McDonald's brand back to its previous level of excellence," Sibilski said.\nMcDonald's shares, which have more than doubled since last March, fell 35 cents to $25.64 in afternoon trading on the New York Stock Exchange.