McDonald’s Updates: October Sales Show Expansion Plans Are Paying Off

McDonald’s (NYSE:MCD) has announced several initiatives to help boost domestic and global sales recently and recent traffic figures show that these are paying off. It announced plans to invest $2.9 billion in 2012 and open more than 1,300 restaurants. The company also wants to invest the money in over 2,400 upgrades of existing restaurants and stated that increasing commodity costs would lead to an increase in the its overall basket of products of around 4.5% to 5.5% in the U.S. and 2.5% to 3.5% in Europe. ^[1]

McDonald’s last week reported strong global comparable sales growth of 5.5% for the month of October giving support to its shares.  ^[2] This past Monday, Bane Knezevic, CEO McDonald’s Germany cited in an interview that the company intends to double coffee sales in Germany in the next four years. Coffee sales are currently around $167 million a year which is expected to increase to $350-$400 million by 2015. ^[3]

In Canada, McDonald’s opened McCafe brand espresso bars at approximately 870 locations making it clear that McDonald’s is keen to capture a sizable share of the Canadian Coffee market. ^[4] We believe McDonald’s is in full expansion expansion mode with major expansion plans for Germany and Canada already in place. The firm has also allocated a decent amount of resources for store openings.

See our complete analysis for MCD stock here

Understand How a Company’s Products Impact its Stock Price at Trefis

1. McDonald’s Positioned for Continued Growth Under the Plan to Win, Company Website, November 10, 2011 [↩]
2. McDonald’s Reports Another Strong Month; Global Comparable Sales Up 5.5% in October, November 8, 2011 [↩]
3. McDonald’s Aims to Double Coffee Sales in Germany, FTD Says, November 14, 2011 [↩]
4. McDonald’s Taking on Starbucks in Specialty Coffee Market, The Vancouver Sun, November 7, 2011 [↩]