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McDonald’s Ends ’09 with Slow Sales But Greater Share

"P'tit Plaisir" mini foods boosted McDonald's European sales in '09.

"P'tit Plaisir" mini foods boosted McDonald's European sales in '09.

McDonald’s reported some impressive sales gains for 2009, but did so with little help from U.S. restaurants in the 4th quarter. Globally, same-store sales were up 10% for the quarter ended Dec. 31, 2009, but rose only +0.1% in the U.S. (up 1% in December). For full-year 2009, global comp sales rose 3.8% and were +2.6% for the U.S., +5.2% for Europe and +3.4% for Asia/Pacific, Middle East an Africa (APMEA).

McDonald’s ended the year with systemwide (global company and franchised unit) sales of $72.386 billion, up 2.4% from $70.693 billion in 2008. U.S. sales totaled $31.03 billion, a 3.4% increase. Its U.S. company-store sales declined due to refranchising, with franchised-store sales in turn rising nearly 5.5%. 

The fourth-quarter sales doldrums clearly have spilled into this quarter. In a conference call with analysts after the numbers were released, the best spin McDonald’s Corp. CEO Jim Skinner could put on January 2010 sales was to say they likely would be “relatively flat.” He stressed that the U.S. marketplace continues to be difficult despite new product introductions such as last year’s Angus burgers and the recently launched Mac Snack Wrap and Dollar Menu at Breakfast, which Skinner said is a permanent addition.

Remodeling also helped European sales and will accelerate in the U.S.

Remodeling also helped European sales and will accelerate in the U.S.

Skinner said McDonald’s customer traffic was positive in every market in which it operated last year, but did not provide specific gains. Asked about McDonald’s U.S. strength, he said the brand increased its share of what he called the “informal eating-out market” by 0.2 or 0.3 percentage points to about 11.3%, keeping it the largest QSR power by far.

On a down note, though, Skinner said the overall size of that informal eating market in terms of total consumer spending is “stagnant or shrinking” around the world. Even when the U.S. economy shows improvement, he said he does not expects to see “enormous change” in consumers’ conservative spending habits.

The chain increased U.S. breakfast sales in 2009, “which was not an easy feat” given high unemployment and difficult comps from the McSkillet and Southern Style Chicken Biscuit introductions in 2008, he said.

mcd_samestoreMcDonald’s continues to expand availability of frappes on U.S. menus, but Skinner said the planned addition of smoothies is moving more slowly. Smoothies should be nationwide by summer, however. 

Vowing to continue to make the McDonald’s brand “modern, relevant and in step with our customers,” Skinner said the chain will increase the pace of store remodeling in the U.S., saying the modernization process has helped it in Europe and Australia. Also boosting 2009 sales in Australia, Skinner said, were the introduction of the Grand Angus and M Selections menu. He cited the “P’tit Plaisir” line of mini/snack size foods as a reason European sales were strong in 2009.

McDonald’s will open 150 to 175 stores this year in China, where addition of a Value Lunch has helped sales. In Japan, introduction of the Quarter Pounder, McChicken and Value Lunch have boosted sales, Skinner said.