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McDonald's Credits Value Promotions for Steady Fourth-Quarter Sales

Opening on Christmas Likely Helped

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McDonald's in the fourth quarter managed to eke out global comparable sales of 0.1%, with U.S. same-store sales up 0.3%, beating some analysts' expectations.

The chain credits that U.S-sales result to readjusting the fourth-quarter calendar to heavily promote value, a plan that CEO Don Thompson said during an earnings call will continue in 2013. The chain "refocused our advertising to enhance support for value in the fourth quarter and we'll continue these efforts into 2013. The marketing calendar will balance large-scale food events, compelling value, ongoing entree news and strong local activity."

Mr. Thompson credited not only heavy value promotion for helping the chain with sales but also premium products such as the Cheddar Bacon Onion Burger and the McRib, both of which were marketed during the fourth quarter.

And while McDonald's U.S. sales were up slightly in the quarter, many of the chain's U.S. locations were open on Christmas Day and Thanksgiving, days that historically were not a priority for the company. Ad Age first reported that McDonald's was urging franchisees to stay open on Christmas, as the company-owned stores that stayed open on Thanksgiving averaged about $6,000 in sales.

Though it's not known how many locations in the U.S. were open on Christmas Day, it's likely enough were open to help mitigate a sales loss. McDonald's, as Ad Age first reported, also moved back the release date for its McRib to the latter half of December. The chain in recent years had started nationally promoting the McRib in October.

McDonald's originally encouraged franchisees to stay open on Thanksgiving after a 2.2% drop in U.S. sales in October. That month, the chains posted its first global comparable sales loss in nine years. In November, McDonald's was able to turn things around and posted 2.5% growth in the U.S.

Despite the volatility in recent months, McDonald's managed to post a 3.3% increase in U.S. sales for the year, although that result isn't as good as recent years. It posted a global increase of 3.1% for 2012. And though its sales were up, sales for the chain have been decelerating since February. The chain, as Mr. Thompson acknowledged, now faces tough comparisons in the coming months, as last winter's sales -- for McDonald's and other chains -- were higher than usual because of the unseasonably mild winter. Mr. Thompson said the company expects negative sales for January.

McDonald's in the fourth quarter increased its revenue 2% to $6.95 billion. Profit in the quarter was up 1% to $1.4 billion. For the full year, the chain posted revenues of $27.57 billion, up 2% from the prior year. Profit was down 1% to $5.5 billion.

Along with continuing to heavily promote value items, McDonald's is currently promoting one of its core items, the Big Mac. Translation created the ads, but Omnicom's DDB is the chain's lead creative agency.

In February, McDonald's will roll out its Fish McBites nationally, which Ad Age first reported, likely to be a limited-time product. Mr. Thompson said that later in the year McDonald's will roll out new beef sandwiches, chicken entrees and beverage and breakfast offers.

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