By Mike Caggeso
Associate Editor
Near double-digit sales growth overseas and relative domestic strength helped McDonald's Corp. (MCD) post 7.7% same-store sales growth in May.
Same-store sales for the fast-food chain jumped 9.6% in Europe and 9.7% in Asia, the Middle East and Africa.
Stateside, same-store domestic sales moved 4.3%, fairly strong considering that U.S. inflation and continued economic woes have made wallets considerably thinner in every pocket of the country.
Same-store sales refers to the performance of restaurants that have been open for at least 13 months.
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While the majority of U.S. stocks have taken a beating in the past year, McDonald's has gained almost 11% while kicking out three dividends in that time span. Today (Monday), the company's shares opened with a $2.02 (3.5%) gain.
In a statement, McDonald's credited new menu items such as its Southern Style Chicken sandwich and its low-priced items for driving sales.
That same strategy - though perhaps not as calculated - worked for restaurant chain Bob Evans Farms Inc. (BOBE), which last week posted a fiscal-fourth quarter net income of $16.1 million, or 52 cents a share, beating analysts' estimates of 40 cents a share.
"We think there are an increasing number of value-conscious customers moving from bar-and-grill restaurants to Bob Evans," analyst Stephen Anderson of MKM Partners told Reuters.
Going Global
Long before gas prices eclipsed $4 a gallon, before food costs rocketed, before the housing and credit crises that sent the economic dominoes falling, McDonald's had been decades-deep in its commitment to global expansion.
Not just expansion, but also adaptation. For example, McDonald's menu at its India stores serves more vegetarian than carnivorous fare.
In neighboring China, McDonald's has been selected as the Official Restaurant of the Beijing 2008 Olympic Games - an honor that will bolster its global reputation further.
And it needs all it can get in Asia, because even though McDonald's is internationally known, it is facing serious competition from Yum! Brands Inc. (YUM), owner of Kentucky Fried Chicken, Taco Bell, Long John Silver's and Pizza Hut.
Yum, in fact, has more restaurant locations than the Golden Arches. And through Yum's variety of stores, it can appeal to a wider range of customers - especially in emerging markets that have yet to establish brand loyalties.
Already rivals, the stakes are even higher with consumer spending curbed in the United States.
Money Morning has extensively covered Yum and McDonald's global growth, as well as other "global titans" - U.S. companies that rely on overseas sales to keep its stockholders happy. Other global titans include The Boeing Corp. (BA), PepsiCo, Inc. (PEP), Coca-Cola Co. (KO),
Several of Money Morning's experts have identified these companies as opportunities investors might want to research further. Their business models for growth don't involve just Asia, but will benefit from having a solid strategy for Asia.
And the more business they do outside the United States market, the more they will benefit from the falling dollar, which make U.S.-made goods cheaper for foreign consumers to buy.
[Editor's note: Our free research report, "Investments for a Weak Dollar World," is one of several research reports that list which U.S.-based companies follow this strategy and benefit in the face of falling greenback. The report is free of charge; please click here].
News and Related Story Links:
- Money Morning:
With Domestic Sales Slowing, Fast Food Players Carry Out International Expansion Plans
- Money Morning Research Report:
Investments for a Week Dollar World