Investing Ideas: McDonald’s COMPS Quarter Pounder


McDonald’s returned $1.6 billion to its shareholders through share repurchases and dividend payments in the second quarter of 2012. Regardless of the reduction in the future assumptions, I consider the main issues facing the company as recurring in nature. I still see McDonald’s as the best restaurant operator having an extraordinary economic moat.
Global comparable-store sales (comps) rose 3.7% in the second quarter, while U.S. sales are up 3.6%, Europe went up 3.8% and Asia/Pacific,Middle East and Africa (APMEA) up with 0.9% which went down from the last quarter of 7.3% as well as last year’s level of 5.6%. MCD’s solution to declining market share in informal eating-out (IEO) industry and slowdown in comps growth, the company started to implement several strategies in each market with main emphasis on extra-value offer. Although, management noted that most of these measures are short-term and could prove detrimental to margins if exercised on a long-term basis, the company still expects these initiatives to dominate the market from late 2012. Continue reading