McDonald's April sales beat analysts' forecasts as US declines slow

New York

MCDONALD'S Corp has reported April sales that topped analysts' projections after declines in the US slowed, giving chief executive officer Steve Easterbrook some momentum to work with as he implements his turnaround plan.

Global same-store sales fell 0.6 per cent, the company said in a statement on Friday. Analysts had estimated a 1.8 per cent drop, according to Consensus Metrix.

Sales at US stores that have been open at least 13 months fell 2.3 per cent, matching analysts' projections and improving from a 3.9 per cent slide in March.

Mr Easterbrook, who took the helm in March, unveiled a plan last week to boost McDonald's sales and profitability. The changes include a leadership shuffle, cost cuts and a push to sell more company- owned locations to franchisees.

Even before he took over, the restaurant chain was working to repair its US business, which has been hurt by new rivals and a complicated menu. McDonald's recently began selling a new sirloin burger and testing all-day breakfast to lure more diners.

Will Slabaugh, an analyst at Stephens Inc, said: "They're moving in the right direction, and there's a very tangible plan in place that people can grab hold of."

Same-store sales gained one per cent in Europe and fell 3.8 per cent in the company's Asia-Pacific, Middle East and Africa (Apmea) region, McDonald's said in Friday's statement. Analysts had estimated a 0.2 per cent rise for Europe and a 5.8 per cent drop for Apmea.

McDonald's shares rose 1.5 per cent to US$98.23 at the close in New York. The Oak Brook, Illinois-based company has gained 4.8 per cent this year, trailing the 11 per cent increase for the Standard & Poor's 500 Restaurants Index.

McDonald's had already announced a couple of significant changes even before Mr Easterbrook rolled out his transformation plan. In March, McDonald's said its restaurants in the US would stop serving chicken raised with some antibiotics in the next two years. The move was seen as a bid to regain diners who had fled to rivals like Chipotle in search of healthier food.

Last month, McDonald's said it would raise hourly pay to at least US$1 above the local minimum wage for workers at the 10 per cent of restaurants in the US owned by the company.

Mr Easterbrook said earlier last week that the company was recommitting to hot and fresh food, as well as friendly service. McDonald's cut seven sandwiches from its menu in the first quarter in a bid to speed up service and simplify orders for customers. Even with the cuts, McDonald's has about 40 items more than it did in 2007.

The company is also experimenting with serving breakfast all day at restaurants in the San Diego area. Customers have long called for McDonald's to serve its popular Egg McMuffin and other breakfast items all day, but it has said its kitchens aren't big enough to cook its entire menu at the same time. The category has become more competitive, with Taco Bell and Starbucks muscling into breakfast as Americans increasingly eat their first meal of the day away from home. BLOOMBERG