A lot of the recent coverage on fast-food giant McDonald's (NYSE:MCD) has centered on efforts to manage brand expectations -- inexpensive, familiar food served fast in an upbeat atmosphere -- while not alienating today's increasingly diet-conscious eater. This morning, however, the focus was back on the numbers.
And the numbers for January looked dynamite. Same-store sales rose 10% year over year worldwide; revenues improved 19%. (Excluding foreign currency effects, they were still up 11%.) Much of that can be credited to an impressive 13% increase in domestic same-store sales. But what's driving those "comps" upward?
It's easy to credit the company's "eat good" and "feel good" marketing. But remember, in its SEC filing for Q3, the company cited not only growth in salads but in its McGriddles breakfast sandwiches and Happy Meals. Not to mention, extended hours and other factors such as driving results. (For a look at the news on recent results from Wendy's (NYSE:WEN) check out Alyce Lomax's take.)
So there were those news stories back in the fall about McDonald's plans to roll out fitness-themed Happy Meal for grown-ups (including salad, drink, and pedometer) later this year. A quick glance at recent press releases reveals missives dealing mostly with nutrition, kids, and marketing -- but very little to do with major changes to its menu.
While the company is certainly pushing its highly profitable salads lately, it's also heavily promoting (in our area, at least) a Philly cheesesteak. In mid-December, meanwhile, McDonald's signed a big Chicago ad agency to help it develop a new 2004 worldwide campaign for its fries.
McDonald's sales, to the company's credit, appear to indicate that the company has finally learned how to credibly target "modern" eaters without scaring off its "traditional" grubbers. For investors who remember the company's failed efforts to popularize the McLean sandwich oh-so many years ago (only to be baffled by the consumer and media obsession with the fact that the sandwich featured seaweed as an ingredient) this must be welcome news.
Hankerin' for a McLean? Share your nostalgia on our McDonald's discussion board.
Dave Marino-Nachison can be reached via email.
