Industry News | October 22, 2008

Skinner: McDonald's is 'Recession Resistant'

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With the “Plan to Win” in full swing, it’s rarely news when McDonald’s reports strong quarterly earnings. But amidst an economic crisis, it is surprising to see a company post a 7.1 percent increase in global same-store sales which McDonald’s reported in its third-quarter statement released today.

"Our dedication to building our business by being better, not just bigger, continues to strengthen our global performance,” says the company’s CEO Jim Skinner in a statement. “For the quarter, we delivered strong comparable sales, higher margin dollars, and a double-digit operating income increase.”

McDonald's U.S. delivered its highest sales increase of 2008, with third quarter comparable sales up 4.7 percent and an operating income growth of 9 percent. In fact, the company’s quarterly success even out performed Wall Street expectations, with profits reaching $1.19 billion, about 16 cents higher per share than expected.

The numbers make it difficult to dispute Skinner’s claim that the quick-serve juggernaut is “recession resistant.” Thanks to the domestic success of core menu classics including the Big Mac, Southern-style chicken products, and value-based beverages, the company has been able to take advantage of customers who are trading down from full-service and casual-dining restaurants.

"Our unwavering commitment to providing an outstanding restaurant experience to every customer, every time,” Skinner says, “is driving comparable sales momentum and profitability growth in each area of the world."

Internationally, Europe generated strong top-line sales in virtually every market, posting a comparable sales increase of 8.2 percent along with an operating income growth of 23 percent while the Asian/Pacific, Middle Eastern, and African markets’ third quarter performances were led by Australia and China. In the Asian/Pacific market, the brand points to its breakfast offerings and core menu items as keys to its success in the region.

“McDonald's is a strong, stable global business and remains well positioned to generate long-term profitable growth for our system and our shareholders," Skinner says.

A link to the archived investor conference call is available at the company’s investor site for a limited time.

--Blair Chancey

News and information presented in this release has not been corroborated by QSR, Food News Media, or Journalistic, Inc.