UPDATE 4-McDonald’s U.S. unit disappoints; Europe strong

* October global same-restaurant sales up 6.5 percent

* U.S. same-restaurant sales up 5.6 pct, below estimates

* Europe and APMEA strong, top analyst estimates

* Shares down 0.6 percent
(Adds Monopoly game promotion, more analyst comments, shares)

By Dhanya Skariachan

NEW YORK, Nov 8 (BestGrowthStock) – McDonald’s Corp (MCD.N: )
reported a weaker-than-expected rise in October sales at U.S.
established restaurants as high unemployment keeps plaguing
the world’s largest hamburger chain’s key domestic market.

October sales at restaurants open at least 13 months were
up 5.6 percent in the United States, but missed some analysts’
estimates. Oppenheimer’s Matthew DiFrisco, who was looking for
a 7.1 percent rise, said analysts on average were expecting a 6
percent increase.

“They slightly stumbled in the U.S.,” DiFrisco said, but
added: “I don’t think anyone is significantly changing their
investment thesis on this number from one month.”

Despite the macroeconomic weakness that has dented overall
demand, the company has been taking U.S. market share from
rivals like No. 2 hamburger chain Burger King, which is now
private after its sale to 3G Capital.

Growth of 5.6 percent is “still one of the strongest
numbers out there within fast food,” DiFrisco said.

The U.S. market, which accounts for about 35 percent of
McDonald’s revenue, got some help in October from the Monopoly
game promotion and popularity of core menu items.

Overall, McDonald’s reported a better-than-expected 6.5
percent rise in global October sales at established
restaurants, as its low-price Dollar Menu and restaurant
renovations helped draw more customers.

“McDonald’s continues to have solid traffic drivers and
pricing power that can drive same-store sales… even if the
consumer recovery remains sluggish,” Jefferies and Co analyst
Andy Barish said.

Barish sees same-store sales of 5 to 6 percent in the
fourth quarter of 2010 and 3 percent in 2011.

October sales at restaurants open at least 13 months were
up 5.8 percent in Europe, which accounts for just above 40
percent of revenue, and up 5.3 percent in the Asia-Pacific,
Middle East and Africa region. Results for both Europe and
APMEA topped analysts’ expectations.

The company cited healthy demand in France, the United
Kingdom and Russia for the strong performance in Europe, while
sales growth in Japan, China and Australia boosted the
Asia/Pacific, Middle East and Africa unit.

Systemwide sales, which includes those at restaurants
operated by the company as well as franchisees, rose 7.4
percent, or 7.8 percent in constant currencies, for the month.

Shares of McDonald’s, which hit a 52-week high of $79.90
late last month, were down 0.6 percent at $78.81 on the New
York Stock Exchange.
(Reporting by Dhanya Skariachan; additional reporting by Lisa
Baertlein, editing by Gerald E. McCormick, Lisa Von Ahn, Dave
Zimmerman)

UPDATE 4-McDonald’s U.S. unit disappoints; Europe strong