McDonald's Second-Quarter Sales up 5.5%

CEO Credits World Cup, Movie Promos for Giant's Strongest Global Showing

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CHICAGO (AdAge.com) -- Forget burgers, fries and salads. A good portion of the credit for McDonald's Corp.'s stellar quarter goes to soccer and cars.
McDonald's same-store sales in Europe outpaced the U.S. in the second quarter.
McDonald's same-store sales in Europe outpaced the U.S. in the second quarter. Credit: AP

The fast-food giant reported its strongest global showing today, helped by a decade-best performance in Europe, including excellent results in Germany, the U.K. and France. For the second quarter ended June 30, McDonald's reported sales at restaurants open for at least 13 months grew 5.5% globally for the quarter, with same-store sales in the U.S. up 4.2%, trailing Europe, which saw same-store sales increase 6.3%.

In a call with analysts, McDonald's CEO, Jim Skinner, called Europe's showing the "strongest quarterly result in more than 10 years." Management credited promotions for the chain's Quarter Pounder, Big Mac, value menus and text-to-win games around the World Cup as the reasons for the jump.

Boost from 'Cars'
U.S. sales also got a boost from coffee and Happy Meal purchases tied to the Walt Disney Co. film "Cars." But executives were quick to cite the balance of core menu items, new products and value options driving traffic and sales.

Despite consumer belt-tightening, Mr. Skinner said McDonald's has not seen a shift toward more purchases from its dollar menu. While noting that guest counts contribute about 40% of the U.S. comparable sales gain, he said: "It's possible that the traffic could start to fall off, we don't know. But thus far, we've been very fortunate regarding that, and the trends are very positive for us."

Mr. Skinner continued to make the point that McDonald's is working to maintain and build customer trust by talking about its food quality, job opportunities and company values. He talked about efforts to connect with consumers through blogs, text messages and conventional advertising.

Sales slowdown?
McDonald's fortunes could change in the coming months as industry watchers predict a sales slowdown in the fast-food segment.

Other questions remain about the traffic-building firepower in the rest of McDonald's 2006 marketing calendar; its current "Pirates of the Caribbean" promotion ends a 10-year promotional pact with Disney. Observers wonder whether the chain's fall Monopoly promotion will be enough to distract consumers from the next wave of publicity tied to the McDonald's-bashing movie "Fast Food Nation" due in theaters Oct. 20.
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