McDonald’s turns in strong April, shows off new design

May 9, 2011

McDonald's Corp.'s global comparable sales were up 6 percent in April. Sales in the U.S. increased 4 percent; Europe was up 6.5 percent; and Asia/Pacific, Middle East and Africa (APMEA) also increased 6.5 percent.

"Our sales momentum continues as we focus on optimizing the menu with the right food and beverage offerings, modernizing the restaurant experience by upgrading our customer service and restaurant designs, and broadening our accessibility through convenience and everyday value," said Jim Skinner, McDonald's CEO. "The demand for McDonald's continues to grow, reflecting the success of our efforts to provide an enjoyable experience for customers around the world."

Also boosting McDonald's April performance were higher menu prices, which helped balance rising beef and commodities costs.

In March, the Golden Arches raised prices by 1 percent in the U.S. More increases are expected, according to the Chicago Tribune, as food costs are predicted to rise 4-4.5 percent this year.

One analyst said the chain's ubiquity – there are 14,000 units in the U.S. – will help sales as gas prices continue to rise, since customers rarely have to drive far to get to a McDonald's.

Upcoming presentations

McDonald's Annual Shareholders' Meeting will be webcast live at 9 a.m. Central Time on May 19 online. An archived replay and podcast of the meeting will be available for a limited time.

Skinner will speak at 8 a.m. Eastern Time at Sanford Bernstein's 27th Annual Strategic Decisions Conference in New York on June 1. This presentation will be webcast live and available for replay for a limited time thereafter.

A $1 billion-dollar makeover

A majority of McDonald's U.S. units are also undergoing makeovers, which is projected to cost the company about $1 billion. According to USA Today, the remodel is the biggest in the company's history and is expected to be mostly complete by 2015.

The prototype features a more comfortable design, highlighted by wooden tables, faux leather chairs and soft interiors such as muted oranges, yellows and greens.

The McDonald's of yesteryear – bright red roofs, fiberglass tables and bright interiors – will be nixed completely. USA Today's story suggested the updated design emulates a Starbucks-esque feel.

And why not? McDonald's has already taken a page out of the premium coffee competition with its introduction of the McCafe line a few years ago, which has proven to be a major boon for the company.

Two-hundred and eighty stores have already been updated and McDonald's will re-design about 800 more this year.

To go along with the change, McDonald's is also expected to expand its menu and, according to the story, "add even more upscale munchies."

Other design highlights include WiFi, an increase in double drive-thrus, contemporary lighting, divided dining areas and large flatscreen TVs.

Topics: Business Strategy and Profitability , Financing and capital improvements , Food & Beverage , Operations Management , Restaurant Design / Layout

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