The fast-food chain said February same-store sales jumped nearly 12%. Perhaps more impressive was an 8% increase in the U.S., helped along by an extra day in the month. The numbers beat expectations of analysts, who were projecting domestic same-store sales increases between 3% and 4%.
More trading down
"We were clearly surprised by the numbers," said Jack Russo, an Edward Jones analyst, who noted that McDonald's is handily beating competitors such as Wendy's, has an edge on the resurgent Burger King and is besting full-service restaurants across the casual-dining category. "No one is even close to these kinds of numbers."
Mr. Russo, who had projected a 3% gain in the U.S. allowing for the extra day, offered this explanation for McDonald's performance. "People want to eat out. They want convenience, but they're also being pressured by the higher costs, like higher gas prices," he said, resulting in more trading down.
Less-saturated markets posted even bigger numbers. European same-store sales were up 15.4%, and the Asia Pacific, Middle East and Africa region was up 10.9%.
Leap Day luck
McDonald's said February's extra day contributed 4%, or half of the month's U.S. increase. To celebrate Leap Day, the fast feeder gave out McSkillet burritos with purchase of a beverage during the last two days of the month. Company spokeswoman Heidi Barker said the promotion "resulted in increased breakfast traffic," but declined to say whether it affected sales.
Following softer-than-usual fourth-quarter same-store growth and a 1.5% jump in January same-store sales in the U.S., the February numbers would seem to dispel the notion that the chain's momentum is slowing.
"I wouldn't call this a slowdown at all," Chief Marketing Officer Mary Dillon said in an interview earlier this month. "Our business is fundamentally strong, and we know that we offer the right thing for customers at multiple price points and the business is strong."
And it may stay that way, Mr. Russo said. "People want to eat out, I don't think they want to cook at home, but right now they don't have the money to spend on full service," he said. "The way McDonald's is positioned right now is pretty darn good and that may continue for awhile. Nobody knows."